<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ULTRAK, 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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 of 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
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.: Schedule 14A
(3) Filing Party: Ultrak, Inc.
(4) Date Filed: April 23, 1995
<PAGE> 2
[ULTRAK LOGO]
Quality Products That
Make a Difference
NOTICE
1996 ANNUAL
MEETING PROXY
STATEMENT
<PAGE> 3
ULTRAK, INC.
1220 CHAMPION CIRCLE, SUITE 100
CARROLLTON, TEXAS 75006
April 15, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Ultrak, Inc. to be held at 3000 Thanksgiving Tower, Dallas, Texas 75201 at 9:00
a.m., Central Standard Time, on Monday, May 20, 1996.
The attached Notice of Annual Meeting and Proxy Statement fully describe the
formal business to be transacted at the Meeting, which includes the election of
five directors and the approval of independent certified public accountants of
the Company.
Directors and officers of the Company will be present to help host the meeting
and to respond to any questions that our stockholders may have. I hope you
will be able to attend.
The Company's Board of Directors believes that a favorable vote for each person
nominated to serve as a director of the Company and for approval of Grant
Thornton LLP as the firm of independent certified public accountants to audit
the accounts of the Company for the fiscal year ending December 31, 1996, are in
the best interests of the Company and its stockholders and unanimously
recommends a vote "FOR" each such director and "FOR" approval of Grant Thornton
LLP as the Company's independent certified public accountants. Accordingly, we
urge you to review the accompanying material carefully and to return the
enclosed Proxy promptly.
Please sign, date and return the enclosed Proxy without delay. If you attend
the Meeting, you may vote in person even if you have previously mailed a Proxy.
Sincerely,
/s/ GEORGE K. BROADY
George K. Broady
Chairman of the Board
<PAGE> 4
ULTRAK, INC.
1220 CHAMPION CIRCLE, SUITE 100
CARROLLTON, TEXAS 75006
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Ultrak, Inc. (the "Company" or "Ultrak") will be held at
3000 Thanksgiving Tower, Dallas, Texas 75201 on Monday, May 20, 1996,
at 9:00 a.m. Central Standard Time, for the following purposes:
(1) to elect five directors to serve until the next Annual Meeting
of Stockholders or until their respective successors are
elected and qualified;
(2) to consider and act upon a proposal to approve the selection
by the Board of Directors of Grant Thornton LLP as the firm of
independent certified public accountants to audit the accounts
of the Company for the fiscal year ending December 31, 1996;
and
(3) to transact such other business as may properly come before
the Meeting or any adjournment thereof.
The close of business on March 29, 1996 has been fixed as the record
date for determining stockholders entitled to notice of and to vote at
the Meeting or any adjournment thereof. For a period of at least ten
days prior to the Meeting, a complete list of stockholders entitled to
vote at the Meeting shall be open to the examination of any
stockholder during ordinary business hours at the offices of the
Company at 1220 Champion Circle, Suite 100, Carrollton, TX 75006.
Information concerning the matters to be acted upon at the Meeting is
set forth in the accompanying Proxy Statement.
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING IN PERSON
ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
By Order of the Board of Directors,
/s/ TIM D. TORNO
Tim D. Torno
Secretary
Carrollton, Texas
April 15, 1996
<PAGE> 5
ULTRAK, INC.
1220 CHAMPION CIRCLE, SUITE 100
CARROLLTON, TEXAS 75006
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1996
This Proxy Statement is being first mailed on or about April 15, 1996
to stockholders of Ultrak, Inc., a Delaware corporation (the "Company"
or "Ultrak"), by the Board of Directors to solicit proxies (the
"Proxies") for use at the Annual Meeting of Stockholders (the
"Meeting") to be held at 3000 Thanksgiving Tower, Dallas, Texas 75201
on Monday, May 20, 1996, at 9:00 a.m., Central Standard Time, or at
such other time and place to which the Meeting may be adjourned.
The purpose of the Meeting is to consider and act upon (i) the
election of five directors; (ii) the approval of independent certified
public accountants; and (iii) such other matters as may properly come
before the Meeting or any adjournment thereof.
All shares represented by valid Proxies, unless the stockholder
otherwise specifies, will be voted (i) FOR the election of the five
persons named under "Election of Directors" as nominees for election
as directors of the Company; (ii) FOR the approval of Grant Thornton
LLP as the firm of independent certified public accountants to audit
the accounts of the Company for the fiscal year ending December 31,
1996; and (iii) at the discretion of the Proxy holders with regard to
any other matters that may properly come before the Meeting or any
adjournment thereof. Where a stockholder has appropriately specified
how a Proxy is to be voted, it will be voted accordingly.
The Proxy may be revoked at any time by providing written notice of
such revocation to the person named as proxy, by voting in person at
the Meeting, or by giving a later Proxy.
RECORD DATE AND VOTING SECURITIES
The record date for determining the stockholders entitled to vote at
the Meeting will be the close of business on March 29, 1996 (the
"Record Date"), at which time the Company had issued and outstanding
approximately 7,327,004 shares of Common Stock, $0.01 par value
("Common Stock"), and 195,351 shares of Series A 12% Cumulative
Convertible Preferred Stock, $5.00 par value ("Series A Preferred
Stock") (the Common Stock and the Series A Preferred Stock are
sometimes collectively referred to herein as the "Voting Shares").
The Voting Shares constitute the only outstanding voting securities of
the Company entitled to be voted at the Meeting.
QUORUM AND VOTING
The presence, in person or by Proxy, of the holders of Voting Shares
holding a majority of the votes entitled to be cast is necessary to
constitute a quorum at the Meeting. Each holder of shares of Common
Stock is entitled to one vote for each share of Common Stock held and
each holder of shares of Series A Preferred Stock is entitled to
16.667 votes for each share of Preferred Stock held with respect to
each matter (including the election of directors) to be voted on at
the Meeting. Assuming the presence of a quorum, the affirmative vote
equal to at least a majority of the votes cast at the Meeting, in
person or by Proxy, is required for the election of directors and
approval of independent certified public accountants. Abstentions
will be included in vote totals and, as such, will have the same
effect as a negative vote. Where nominee recordholders do not vote on
specific issues
<PAGE> 6
because they did not receive specific instructions on such proposal
from the beneficial owners of such shares ("broker nonvotes"), such
broker nonvotes will not be included in vote totals and, as such, will
not be considered as votes cast.
ELECTION OF DIRECTORS
There are five directors to be elected for terms expiring at the
Company's Annual Meeting of Stockholders in 1997 or until their
respective successors are elected and qualified. The persons
nominated for election as director are listed below. Each of the
nominees has indicated his willingness to serve as a member of the
Board of Directors if elected; however, in case any nominee shall
become unavailable for election to the Board of Directors for any
reason not presently known or contemplated, the Proxy holders will
have discretionary authority in that instance to vote the Proxy for a
substitute.
GEORGE K. BROADY, age 57, is Chairman of the Board, Chief Executive
Officer and President of the Company. Mr. Broady became Chairman of
the Board, President and Chief Executive Officer in March 1991. Prior
to that date, Mr. Broady was actively involved as Owner and President
of Geneva Merchant Bankers of Dallas, Texas. Until December 1987, Mr.
Broady was Chairman and Chief Executive Officer of Network Security
Corporation, a company that he founded in 1970. Network Security
Corporation and the publicly-held stock of its controlled subsidiary
were sold to Inspectorate International, a Swiss company, in 1987 for
$165 million. Mr. Broady received his BS (cum laude) from Iowa State
University in 1960. Mr. Broady devotes substantially all of his
executive time to the Company.
JAMES D. PRITCHETT, age 49, is a Director, the Executive Vice
President and Chief Operating Officer of the Company. Mr. Pritchett
joined the Company in September 1988 as Chief Operating Officer. He
was promoted to Executive Vice President in October 1991. From
October 1, 1980 to September 1, 1988, Mr. Pritchett was Executive Vice
President and Chief Operating Officer of Booth, Inc., Carrollton,
Texas, a manufacturer of electronic equipment. Mr. Pritchett received
his BS Degree in Mechanical Engineering from the University of Texas
at Arlington in 1969, and his MS in Mechanical Engineering in 1972
from Southern Methodist University, Dallas, Texas. Mr. Pritchett was
appointed to the Board of Directors in August, 1989. From 1969 to
1972, he was an engineer with LTV Aerospace and from 1972 to 1978 he
was a product manager for Thermalloy, Inc. He was a research and
development engineer with Glitech, Inc. from 1978 to 1980.
WILLIAM C. LEE, age 56, has been the Senior Vice President of the
Annuity Board of the Southern Baptist Convention of Dallas, Texas, a
$4.5 billion dollar pension and insurance management company, since
July 1991. Mr. Lee served as Managing Director of Geneva Merchant
Bankers of Dallas, Texas, from 1989 until 1991 and as an executive
officer and director of several major southwestern banking companies
for the 27 years prior to that. Mr. Lee earned his BBA from
Texas A & M University in 1962 and his MBA from Southern Methodist
University in 1966. Mr. Lee is a CPA in the State of Texas and a
member of the American Institute of CPAs, the Texas Society of CPAs,
the Financial Executives Institute and the American Institute of Image
Management.
CHARLES C. NEAL, age 37, has been President of Chas. A. Neal & Company
of Miami, Oklahoma, a company which owns interests in oil and gas
properties and in various corporations in several industries,
including banking, since 1989. From 1985 to 1989, Mr. Neal was with
Merrill Lynch & Co. in New York
2
<PAGE> 7
City, performing investment banking, general corporate finance and
mergers and acquisitions services for a variety of clients. Mr. Neal
is also a director of several privately held companies. Mr. Neal
received his BA in Economics in 1981 from the University of Oklahoma
and a JD/MBA from the University of Chicago Law School and Graduate
School of Business in 1985.
ROBERT F. SEXTON, age 61, has been President of Bakery Associates,
Inc. of Dallas, Texas, a company which brokers bakery packaging goods,
since 1983. From 1973 to 1983, Mr. Sexton was Executive Vice
President and a director of Campbell Taggart, Inc. of Dallas, Texas,
one of the nation's largest baking companies. Campbell Taggart was
listed on the New York Stock Exchange prior to its acquisition by
Anheuser Busch in 1982. Mr. Sexton is also a director of Republic
Gypsum Company, a New York Stock Exchange-listed corporation which
manufactures and distributes paperboard. Mr. Sexton earned his BBA in
Industrial Management in 1956 from the University of Texas.
BOARD OF DIRECTORS AND COMMITTEES
The Company has an Audit Committee and a Compensation Committee to
assist the Board of Directors.
The Audit Committee, composed of Messrs. Lee, Neal and Sexton, is
responsible for (i) reviewing the scope of, and the fees for, the
annual audit of the Company, (ii) reviewing with the independent
auditors the Company's corporate accounting practices and policies,
(iii) reviewing with the independent auditors their final report, (iv)
reviewing with the independent auditors overall accounting and
financial controls, and (v) being available to the independent auditors
during the year for consultation purposes. The Audit Committee met
twice in 1995.
The Compensation Committee, composed of Messrs. Lee, Neal and Sexton,
is responsible for determining the nature and amount of compensation
for the executive officers of the Company, and for granting stock
options under the Company's stock option plan. The Compensation
Committee met four times in 1995.
During 1995, there were three regular meetings and four special
meetings of the Board of Directors, and all directors of the Company
attended at least 75% of all meetings of the Board of Directors and
each of the committees on which they served.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
Name Age Position
--------------------------------------------------------------------
<S> <C> <C>
George K. Broady 57 Chairman of the Board, Chief Executive
Officer and President
James D. Pritchett 49 Director, Executive Vice President and
Chief Operating Officer
Tim D. Torno 38 Vice President-Finance, Secretary,
Treasurer and Chief Financial Officer
--------------------------------------------------------------------
</TABLE>
See "Election of Directors" for business experience information
concerning Messrs. Broady and Pritchett.
TIM D. TORNO, Vice President-Finance, Secretary, Treasurer and Chief
Financial Officer. Mr. Torno has been the Secretary, Treasurer and
Chief Financial Officer of the Company since August, 1988. From
May
3
<PAGE> 8
1980 to August, 1988, Mr. Torno was employed by KPMG Peat Marwick
in Denver, New York, and Corpus Christi, Texas, in various capacities
including senior manager. Mr. Torno received a BBA in Accounting (cum
laude) from Texas A & M University, College Station, Texas, in 1979
and a MBA degree (with honors) in 1993 from the University of Phoenix,
Denver, Colorado. Mr. Torno is a CPA in the States of Texas and
Colorado, and is a member of the American Institute of CPAs and the
Texas Society of CPAs.
EXECUTIVE COMPENSATION
The following summary sets forth all annual and long-term compensation
paid or accrued to the Company's Chief Executive Officer and each of
the Company's executive officers earning in excess of $100,000 during
1995 for services rendered to the Company during the fiscal years
ended December 31, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
-----------------------------------------------------------------------------------------------------------------
Annual Compensation Long-term Compensation
---------------------------------------------- ----------------------------
Awards
----------------------------
Securities
Name and Other Restricted Underlying
Principal Annual Stock Options/ All Other
Position Year Salary Bonus Compensation Awards SARs (1) Compensation(2)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
George K. Broady, 1995 $268,000 - - - 50,000 $2,179
Chief Executive
Officer and 1994 $240,000 $84,000 - - - $1,613
President
1993 $212,762 $54,750 - - - $1,104
James D. Pritchett, 1995 $198,000 - - - 37,500 $3,657
Executive Vice
President 1994 $164,000 $54,400 - - - $2,737
1993 $154,078 $61,200 - - - $1,799
Tim D. Torno, 1995 $138,000 - - - 18,750 $2,296
Vice President-
Finance, Secretary, 1994 $105,000 $36,750 - - - $1,872
Treasurer and
Chief Financial 1993 $ 86,400 $36,000 - - 20,833 $1,322
Officer
-----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) SARs are defined as stock appreciation rights.
(2) Company's contribution to employee's 401(k).
4
<PAGE> 9
OPTION/SAR GRANTS
The following table provides information on stock option/SAR grants to
the named executive officers during 1995:
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
---------------------------------------------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
----------------------------------------------------------- ----------------------------
% of Total
Options/SARs
Granted to Exercise
Options/sars Employees or Base
Granted in Fiscal Price Expiration
Name (Number) Year ($/Share) Date 5% ($) 10% ($)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
George K. Broady 50,000 34% $5.63 2/24/2005 $177,000 $448,638
James D. Pritchett 37,500 26% $5.63 2/24/2005 $132,750 $336,375
Tim D. Torno 18,750 13% $5.63 2/24/2005 $ 66,375 $168,187
---------------------------------------------------------------------------------------------------------------
</TABLE>
The Company adopted a Nonqualified Stock Option Plan (the "Plan") on
April 15, 1988. The Plan (amended November 1, 1991 and December 28,
1993) relates to a total of 833,333 shares of Common Stock. Options to
purchase such shares may be issued to full-time employees, including
officers, chosen by the Compensation Committee of the Board of
Directors. The options vest based upon full-time employment with the
Company at the rate of 20% per year over a five-year period. The
options expire ten years from the date of grant. The option exercise
price is based upon the approximate current value of the Company's
Common Stock on the date of grant. Options which are vested may be
exercised at any time thereafter and prior to the expiration of the
option.
The options may be exercised for the entire amount of optioned shares
granted in the event (i) the optionee dies or becomes disabled, (ii)
the Company is merged, consolidated or reorganized, (iii) the Company
is dissolved or liquidated, (iv) substantially all property and assets
of the Company are sold, (v) more than 50% ownership of the Company is
transferred, or (vi) the employee is terminated, but not for cause, and
his written employment agreement so provides. Further, if an employee
is dismissed for cause, unexercised options to the extent vested may be
exercised for 30 days before automatically expiring.
As of December 31, 1995, options to purchase 666,875 shares were
outstanding at exercise prices ranging from $1.20 per share to $7.50
per share. Of the total options, options to purchase 420,100 shares
were subject to options held by the three executive officers of the
Company. The option exercise price is set by the Compensation
Committee of the Board of Directors on the date of grant near or at the
then verifiable market price of the Company's Common Stock. During
1995, 146,750 options were granted to employees of the Company at the
then market price. During 1995, 8,500 options were exercised by three
employees and options to purchase 4,334 shares were cancelled.
5
<PAGE> 10
OPTION/SAR GRANTS, EXERCISES AND HOLDINGS
There were no exercises of stock options (or tandem SARs) and
freestanding SARs during 1995 by any of the named executive officers.
The unexercised options owned by the named executive officers as of
December 31, 1995, are presented below:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised In-
Unexercised the-Money
Options/SARs Options/SARs
Shares Value at 12/31/95 at 12/31/95
Acquired on Realized Exercisable/ Exercisable/
Name Exercise # ($) Unexercisable Unexercisable
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
George K. Broady - - 111,081/77,770 $475,149/$158,862
James D. Pritchett - - 116,666/37,500 $499,789/$30,281
Tim D. Torno - - 45,833/31,250 $168,178/$20,609
-------------------------------------------------------------------------------------------------------------
</TABLE>
REPORT ON REPRICING OF OPTIONS/SARS
There were no adjustments or amendments during 1995 to the exercise
price of any stock options or SARs previously awarded to any of the
named executive officers.
LONG-TERM INCENTIVE PLAN (LTIP) AWARDS
There were no awards made to named executive officers during 1995 under
any LTIP. However, the Company has adopted a policy to compensate its
executive officers and key employees with annual bonuses. Essentially
the policy is to evaluate, on an annual basis, each officer's or key
employee's entitlement, if any, to a bonus. The Compensation
Committee, in its sole discretion, may award a bonus of up to 50% of an
employee's base salary, based on achievement of certain operating
goals, asset management, employee development and improvement in other
areas considered important and valuable to the Company.
EMPLOYEE BENEFIT PLANS
The Company does not sponsor any defined benefit or actuarial plans.
However, the Company does sponsor a 401(k) plan for all eligible
employees whereby the Company matched 40% during 1995 of the employee's
contribution up to 6% of the employee's base salary. In 1995, Messrs.
Broady, Pritchett and Torno received $2,179, $3,657 and $2,296,
respectively, in matching 401(k) contributions under the program.
During 1995, the Company provided a medical insurance program for its
full-time employees of which it paid 60% of the premium. As of
December 31, 1995, the Company did not have any life insurance or any
defined benefit retirement or pension plans for its employees, officers
or directors other than a keyman life insurance policy on George K.
Broady in the amount of $1.0 million.
The Company has a policy that all loans from the Company or its
subsidiaries to its officers, directors and key employees or their
affiliates must be approved by a majority of disinterested directors.
There were no loans made or outstanding to officers, directors and/or
key employees or their affiliates during 1995.
6
<PAGE> 11
COMPENSATION OF DIRECTORS
Each director of the Company serves until the next annual meeting of
the Company's stockholders or until his successor is elected and
qualified. Each independent director receives a fee of $1,000 for each
Board of Directors' meeting and $500 for each committee meeting
attended, and officers and directors are generally reimbursed for
out-of-pocket expenses incurred in connection with attendance at Board
of Directors and committee meetings.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Messrs. James D. Pritchett, Executive Vice President of the Company, and
Tim D. Torno, Vice President-Finance, Secretary, Treasurer and Chief
Financial Officer, have written employment agreements with the Company
with varying terms and provisions. The Company has no termination of
employment or change-in-control arrangements, except as to the
substantive effect of Mr. Broady's stock ownership.
Mr. Pritchett's employment agreement, entered into in 1995, provides
for a two year term, but automatically extends for one year periods.
Mr. Torno's employment agreement was also entered into in 1995 and
provides for a one year term but automatically extends for one year
periods. The employment agreements set Mr. Pritchett and Mr. Torno's
base salaries at $198,000 and $138,000, respectively, however, the
Board of Directors may decide to compensate the two at higher rates.
The employment agreements also contain standard provisions relating to
the employee being entitled to participation in the Company's 1988
Nonqualified Stock Option Plan and participation in a bonus program.
The agreements provide that the employee is to be reimbursed for
reasonable expenses incurred in connection with the Company's business
and certain relocation expenses. The agreements further provide for
standard paid vacations, other health and accident coverage and
insurance benefits.
The Company may terminate the employment agreements if the employee
commits a breach of the agreement, is convicted of a criminal offense,
becomes bankrupt, grossly neglects the performance of his duties or
becomes chemically addicted to alcohol, drugs or any controlled
substance. If terminated by the Company for any of those reasons, it
is considered cause, and upon termination for cause, all benefits,
including all stock options previously granted to the employee, are
cancelled and rendered null and void. In the event the Company
terminates the employee without cause, then all options become
exercisable for the full amount of the optioned shares and the employee
is entitled to receive all compensation he would otherwise have been
entitled to receive under the terms of the agreement and all other
benefits for a period of 18 months for Mr. Pritchett and a period of
one year for Mr. Torno. If the employee terminates the agreement for
any reason, he is entitled to exercise only those options which have
been fully vested at the time of termination and he must exercise them
within 30 days of the date of termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
William C. Lee, Charles C. Neal and Robert F. Sexton are members of the
Compensation Committee of the Board of Directors. Each of Messrs. Lee,
Neal and Sexton is an independent director.
7
<PAGE> 12
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has furnished the following report on the
Company's executive compensation program. The report describes the
Compensation Committee's compensation policies applicable to the
Company's executive officers and provides specific information
regarding the Chief Executive Officer's compensation.
The Board of Directors created the Compensation Committee in June 1994,
with Charles C. Neal, William C. Lee and James D. Pritchett as members.
On May 25, 1995, the Board of Directors added Robert F. Sexton to the
Compensation Committee and James D. Pritchett resigned from the
Compensation Committee to provide complete outside director membership.
The Compensation Committee views executive compensation as consisting
of three main components: base salary and benefits, annual incentives
and long-term incentives. The Compensation Committee's objective is to
attract, retain and motivate executive officers through this
combination to achieve strategic and financial objectives to create
value for the stockholders of Ultrak. The Compensation Committee is in
the process of creating a total compensation package which will
determine compensation primarily on performance-based, objective
criteria, such as net income, net income per share, return on equity
and returns to stockholders through long-term appreciation of the
Company's stock. The Compensation Committee would like to encourage
ownership of Ultrak stock by the executive officers and to tie a large
portion of the executive officers' compensation to the performance of
the Company and hence to align executive officers' interests more
closely with stockholders' interests. The Compensation Committee also
wants to have a discretionary component to reward exceptional
individual achievement.
The Compensation Committee believes that Mr. Broady, as Chief Executive
Officer, significantly and directly influences the Company's overall
performance. Accordingly, the Compensation Committee uses base salary
and benefits, annual incentives and long-term incentives to retain and
motivate Mr. Broady and evaluates Mr. Broady's compensation in light
of the Company's and his performance.
The Compensation Committee reviewed the salaries of the executive
officers of the Company in 1995. Based on the Company's failure to
achieve budgeted sales and net income, the essentially flat net income
performance of Ultrak for 1995 compared to 1994 and the significant
underperformance of Ultrak stock relative to most stock market indices
in 1995, the Compensation Committee approved a salary raise of 3% for
each of the top executive officers, with an agreement to consider an
upward adjustment of 5% in mid-1996, retroactive to January 1, 1996, if
Ultrak is then meeting certain financial targets. The Compensation
Committee decided some increase in compensation was merited due to the
successful completion of three acquisitions and 20% growth in sales of
existing operations during the year. The Compensation Committee
authorized no bonuses for top management in 1995 because the Company did
not achieve budgeted net income and the Committee did not grant any
stock options based on 1995 performance.
On January 5, 1995, the Compensation Committee granted options to
purchase 50,000, 37,500 and 18,750 shares of Ultrak Common Stock to
George K. Broady, James D. Pritchett and Tim D. Torno, respectively.
The Compensation Committee granted these options at $5.63, the fair
market value of the shares at the time of grant. The Compensation
Committee based these awards on several factors, some of which were
subjective, including substantial increases in sales and net income and
evaluations of individual performance during 1994. The Compensation
Committee notes that these are the first stock options that Mr. Broady
has received from the Company based on the Company's performance and
his employment with the Company.
Charles C. Neal
William C. Lee
Robert F. Sexton
8
<PAGE> 13
PERFORMANCE GRAPHS
The following chart (Chart A) compares the cumulative total stockholder
return on the Company's Common Stock during the five fiscal years ended
December 31, 1995, with the cumulative total return on the Nasdaq Stock
Market index and a self-determined peer group. The self-determined
peer group consists of ten companies actively competing with the
Company in the security industry. The Company chose to use the
self-determined peer group rather than the peer group composed of all
publicly-traded companies with the same two digit SIC code (wholesale
trade - durable goods) used in prior years because the Company believes
that the self-determined peer group is more indicative of the Company's
competition in the security industry.
Chart B shows the cumulative total return of the peer group composed of
all public companies with the same two digit SIC code for comparison
purposes.
The Company relied upon information provided by the University of
Chicago Center for Research in Securities Prices with respect to the
peer group stock performance. The Company did not attempt to validate
the information supplied to it other than to review it for
reasonableness. The comparison assumes $100 was invested on December
31, 1990 in the Company's Common Stock and in each of the foregoing
indices and assumes reinvestment of dividends, if any. Adjustments
have been made to give retroactive effect to the December 1993
one-for-six reverse stock split.
9
<PAGE> 14
CHART A
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR ULTRAK, INC.
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/29/95
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ultrak, Inc. 100.0 462.5 412.5 474.8 474.8 429.0
Nasdaq Stock Market (US Companies) 100.0 160.5 186.8 214.5 209.7 296.6
Self-Determined Peer Group 100.0 156.1 198.7 280.7 291.4 263.7
</TABLE>
Companies in the Self-Determined Peer Group
CHECKPOINT SYSTEMS INC COHU INC
KNOGO NORTH AMERICA INC LO JACK CORP
MAGAL SECURITY SYSTEMS LTD PITTWAY CORP
ROLLINS INC SENSORMATIC ELECTRONICS GROUP
VICON INDUSTRIES INC VIDEO SENTRY GROUP
10
<PAGE> 15
CHART B
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR ULTRAK, INC.
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/29/95
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ultrak, Inc. 100.0 462.5 412.5 474.8 474.8 429.0
Nasdaq Stock Market (US Companies) 100.0 160.5 186.8 214.5 209.7 296.6
NYSE/AMEX/NASDAQ Stocks
(SIC 5000-5099) 100.0 140.8 163.9 204.3 192.0 225.3
</TABLE>
11
<PAGE> 16
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of the Company's Common Stock and Series A
Preferred Stock as of December 31, 1995, by (i) each person who is known
to the Company to own beneficially more than five percent of the
outstanding shares of Common Stock, or the outstanding shares of Series
A Preferred Stock of the Company and their address, (ii) each executive
officer and director, (iii) each nominee for director and (iv) all
executive officers and directors as a group.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Series A Preferred
Common Stock (1) Stock (1)
------------------------------------------------------------------------------------------------
Shares Percentage Shares Percentage
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
George K. Broady 2,190,435(2) 27.79% 195,351(3) 100%
Chairman of the Board,
Chief Executive Officer
and President
1220 Champion Circle
Suite 100
Carrollton, Texas 75006
James D. Pritchett 161,995(4) 2.17% -0- -0-
Executive Vice President,
Chief Operating Officer
and Director
William C. Lee, 29,667 * -0- -0-
Director
Charles C. Neal, 156,909(5) 2.14% -0- -0-
Director
Robert F. Sexton 103,066(6) 1.41% -0- -0-
Director
Tim D. Torno 54,349(7) * -0- -0-
Secretary, Treasurer and
Chief Financial Officer
All executive officers and 2,696,421(2)(8) 33.45% 195,351(3) 100%
directors as a group
(six persons)
------------------------------------------------------------------------------------------------
</TABLE>
(1) Except as otherwise indicated, the persons named in the table
possess sole voting and investment power with respect to all
shares shown as beneficially owned.
(2) Includes 166,667 shares held by a trust for the benefit of
members of Mr. Broady's extended family, of which Mr. Broady
serves as sole trustee, 148,851 shares of Common Stock issuable
upon exercise of stock options currently exercisable or
exercisable within 60 days of the date of this Proxy Statement
and 406,981 shares of Common Stock issuable upon conversion
of shares of Series A Preferred Stock owned by Mr. Broady. Mr.
Broady disclaims beneficial ownership of the shares of Common
Stock owned by the trust.
12
<PAGE> 17
(3) The Series A Preferred Stock has 16.667 votes per share.
Through ownership of Common and Series A Preferred Stock, over
50% of the voting power of all of the outstanding capital
stock is held by Mr. Broady.
(4) Includes 124,166 shares of Common Stock issuable upon exercise
of stock options currently exercisable or exercisable within
60 days of the date of this Proxy Statement held by Mr.
Pritchett.
(5) Comprised of 9,650 shares owned by Pantheon, Incorporated, a
corporation owned by Mr. Neal and his wife, and 147,259 shares
owned by Chas. A. Neal & Company, a corporation of which Mr.
Neal is President.
(6) Includes 5,556 shares owned by Mr. Sexton's wife.
(7) Includes 53,750 shares of Common Stock issuable upon exercise
of stock options currently exercisable or exercisable within
60 days of the date of this Proxy Statement held by Mr. Torno.
(8) Includes options to purchase an aggregate of 177,196 shares
held by Messrs. Pritchett and Torno.
* less than 1%
CERTAIN TRANSACTIONS
Since July 1993, the Company has provided Veravision, Inc.
("Veravision") with a working capital line of credit in return for
interest on the borrowed funds and warrants to purchase Veravision's
capital stock. On December 30, 1994, Mr. Broady, the Chairman of the
Board, Chief Executive Officer and President of the Company,
guaranteed the repayment of certain indebtedness of Veravision to the
Company. Prior to the Company making the line of credit available to
Veravision, Mr. Broady had no relationship with Veravision. Prior to
Mr. Broady's guarantee, Veravision had granted the Company warrants to
purchase 59% of Veravision's capital stock on a fully-diluted basis.
Mr. Broady guaranteed certain amounts due under notes made by
Veravision to the Company. At December 31, 1995, the amount
guaranteed by Mr. Broady was approximately $470,000 and the total
amount of indebtedness of Veravision to the Company was $1,000,000.
In consideration of his guaranty, the Company transferred warrants to
purchase approximately 30% of Veravision's capital stock to Mr.
Broady. Should the amount covered by Mr. Broady's guaranty increase,
the Company would be obligated to transfer warrants to purchase
additional shares of Veravision stock to Mr. Broady. Veravision is a
supplier of certain dental camera products to the Company. Purchases
by the Company of Veravision products in 1995 totaled $2,158,000. At
present, Mr. Broady's only relationship with Veravision is in his
capacity as a guarantor of certain debt owed to the Company by
Veravision (as described above) and as the holder of warrants to
acquire approximately 30% of Veravision's stock. Mr. Broady is
neither an officer nor director of Veravision.
During 1995 the Company made purchases of approximately $266,000 from
Ultrak Electronics Limited, a Hong Kong corporation of which Mr.
Broady owns approximately 49% of the capital stock. The Company
believes that these purchases were made at prices and on terms at
least as favorable to the Company as those which could have been
obtained in an arm's length transaction with an unaffiliated party.
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Grant Thornton LLP has served as independent certified public
accountants to audit the accounts of the Company for the fiscal year
ending December 31, 1995. If the stockholders of the Company do not
approve such appointment, the Board of Directors will not appoint the
firm as auditors for the fiscal year ending December 31, 1996.
Representatives of Grant Thornton LLP are expected to be present at
the Meeting with the opportunity to make a statement if they desire to
do so and to be available to respond to appropriate questions.
13
<PAGE> 18
OTHER BUSINESS
The Board of Directors knows of no matter other than those described
herein that will be presented for consideration at the Meeting.
However, should any other matters properly come before the Meeting or
any adjournment thereof, it is the intention of the persons named in
the accompanying Proxy to vote in accordance with their best judgment
in the interest of the Company.
STOCKHOLDER PROPOSALS
Stockholders may submit proposals on matters appropriate for
stockholder action at subsequent annual meetings of the Company
consistent with Rule 14a-8 promulgated under the Securities Exchange
Act of 1934, as amended. For such proposals to be considered for
inclusion in the Proxy Statement and Proxy relating to the 1997 Annual
Meeting of Stockholders, such proposals must be received by the
Company not later than January 16, 1997. Such proposals should be
directed to Ultrak, Inc., 1220 Champion Circle, Suite 100, Carrollton,
Texas 75006, Attention: Secretary.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors and persons who own more than 10% of
the Common Stock or securities convertible into Common Stock, to file
with the Securities and Exchange Commission ("SEC") and the Nasdaq
National Market reports of ownership and reports of changes in
ownership in the Common Stock and securities convertible into Common
Stock of the Company. Such officers, directors and greater than 10%
stockholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that
no other reports were required during its fiscal year ended December
31, 1995, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% stockholders were complied
with.
MISCELLANEOUS
All costs incurred in the solicitation of Proxies will be borne by the
Company. In addition to the solicitation by mail, officers and
employees of the Company may solicit Proxies by telephone, telegraph
or personally, without additional compensation. The Company may also
make arrangements with brokerage houses and other custodians, nominees
and fiduciaries for the forwarding of solicitation materials to the
beneficial owners of shares of Common Stock held of record by such
persons, and the Company may reimburse such brokerage houses and other
custodians, nominees and fiduciaries for their out-of-pocket expenses
incurred in connection therewith.
The Company's Annual Report for the fiscal year ended December 31,
1995 (the "Annual Report") accompanies this Proxy Statement. The
Annual Report is not to be deemed part of this Proxy Statement.
By Order of the Board of Directors,
/s/ TIM D. TORNO
Tim D. Torno
Secretary
Carrollton, Texas
April 15, 1996
14
<PAGE> 19
ULTRAK, INC.
PROXY CARD
The undersigned hereby (i) acknowledges receipt of the Notice dated April
15, 1996, of the Annual Meeting of Shareholders of Ultrak, Inc. (the
"Company") to be held at 3000 Thanksgiving Tower, Dallas, Texas 75201, on
Monday, May 20, 1996, at 9:00 a.m. Central Standard Time, and the Proxy
Statement in connection therewith; and (ii) appoints George K. Broady and Tim
D. Torno, and each of them, the undersigned's proxies with full power of
substitution, for and in the name, place and stead of the undersigned,
to vote upon and act with respect to all of the shares of Common Stock
and Preferred Stock of the Company standing in the name of the undersigned
or with respect to which the undersigned is entitled to vote and act, at the
meeting and at any adjournment thereof; and (iii) directs that this proxy be
voted as follows:
(a) Proposal to elect five directors to serve until the next Annual
Meeting of Shareholders or until their respective successors are
elected and qualified.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as marked to the contrary) all nominees listed below
Directors: George K. Broady, James D. Pritchett, William C. Lee, Charles C.
Neal and Robert F. Sexton.
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write the nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
(b) Proposal to approve the selection by the Board of Directors of Grant
Thornton LLP as the firm of independent certified public accountants to
audit the accounts of the Company for the fiscal year ending December 31,
1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) In the direction of the proxies on any other matter that may properly come
before the meeting or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on the reverse side.)
<PAGE> 20
(Continued from other side.)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED. UNLESS
OTHERWISE MARKED, THE PROXY WILL BE VOTED "FOR" THE MATTERS SPECIFICALLY
REFERRED TO ABOVE.
If both of the proxies named above shall be present in person or by substitute
at the meeting or any adjournment thereof, both of the proxies so present and
voting, either in person or by substitute, shall exercise all of the proxies
hereby given.
The undersigned hereby revokes any proxy heretofore given to vote upon or act
with respect to such Common Stock and Preferred Stock and hereby ratifies and
confirms all that the proxies, their substitutes, or any of them may lawfully
do by virtue hereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Signature:
-------------------------------
-----------------------------------------
Date:
------------------------------------
Please date this Proxy and sign your
name exactly as it appears hereon. Where
there is more than one owner, each
should sign. When signing as an
attorney, administrator, executor,
guardian or trustee, please add your
title as such. If executed by a
corporation, the Proxy should be signed
by a duly authorized officer. Please
date, sign and mail this proxy card in
the enclosed envelope. No postage is
required if mailed in the U.S.
