<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 (AMENDMENT NO. )
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 sec. 240.14a-11(c) or sec. 240.14a-12
ULTRAK, INC. (Name of Registrant as Specified in its
------------------------------- Charter)
(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)(l) and 0-11.
(1) Title of each class of securities to which transaction applies: Common Stock
------------
(2) Aggregate number of securities to which transaction applies: 11,679,355
---------------
(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): N/A
-------------------------------
(4) Proposed maximum aggregate value of transaction: N/A
---------------------------
(5) Total fee paid: N/A
-----------------------
- --------------------------------------------------------------------------------
[ ] 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.:
(3) Filing Party:
(4) Date Filed:
[ULTRAK PICTURE]
<PAGE> 2
ULTRAK, INC.
1301 WATERS RIDGE DRIVE
LEWISVILLE, TEXAS 75057
April 28, 2000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders (the
"Meeting") of Ultrak, Inc. (the "Company") to be held at Ultrak's Worldwide
Support Center, 1301 Waters Ridge Drive, Lewisville, Texas 75057 at 9:00 a.m.,
central daylight time, on Friday, June 2, 2000.
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 and ratification 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 shareholders 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 and
ratification 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, 2000, are in the best interests of the Company and its
shareholders. Therefore, the Board of Directors unanimously recommends a vote
"FOR" each such director, "FOR" approval and ratification of Grant Thornton LLP
as the Company's independent certified public accountants, yet notwithstanding
the selection of Grant Thornton LLP, the Board of Directors, in its discretion,
may direct the appointment of new independent auditors at any time during the
year if the Board of Directors feels that such a change would be in the best
interests of the Company and its shareholders. 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> 3
ULTRAK, INC.
1301 WATERS RIDGE DRIVE
LEWISVILLE, TEXAS 75057
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 2, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of Ultrak, Inc. (the "Company" or "Ultrak") will be held at 1301
Waters Ridge Drive, Lewisville, Texas 75057 on Friday June 2, 2000 at 9:00 a.m.,
central daylight time, for the following purposes:
(1) to elect five directors to serve until the next Annual Meeting of
Shareholders or until their respective successors are elected and qualified;
(2) to consider and act upon a proposal to approve and ratify 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, 2000. Grant Thornton LLP has served as the Company's
independent auditors since 1991. Notwithstanding the selection of Grant Thornton
LLP, the Board of Directors, in its discretion, may direct the appointment of
new independent auditors at any time during the year if the Board of Directors
feels that such a change would be in the best interests of the Company and its
shareholders; and
(3) to transact such other business as may properly come before the Meeting or
any adjournment thereof.
The close of business on April 3, 2000 has been fixed as the record date for
determining shareholders 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 shareholders entitled to vote at the Meeting shall be open to
the examination of any shareholder during ordinary business hours at the offices
of the Company at 1301 Waters Ridge Drive, Lewisville, Texas 75057.
Information concerning the matters to be acted upon at the Meeting is set
forth in the accompanying Proxy Statement.
SHAREHOLDERS 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/ MARK L. WEINTRUB
Mark L. Weintrub
Secretary
Lewisville, Texas
April 28, 2000
2
<PAGE> 4
ULTRAK, INC.
1301 WATERS RIDGE DRIVE
LEWISVILLE, TEXAS 75057
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 2, 2000
This Proxy Statement is being first mailed on or about April 28, 2000 to
shareholders of Ultrak, Inc., a Delaware corporation (the "Company" or
"Ultrak"), by the Board of Directors of the Company to solicit proxies (the
"Proxies") for use at the Annual Meeting of Shareholders (the "Meeting") to be
held at 1301 Waters Ridge Drive, Lewisville, Texas 75057 on Friday, June 2,
2000, at 9:00 a.m., central daylight 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 and ratification 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 shareholder 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 and ratification 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, 2000. Notwithstanding the selection of
Grant Thornton LLP, the Board of Directors, in its discretion, may direct
appointment of new independent auditors at any time during the year if the Board
of Directors feels that such a change would be in the best interests of the
Company and its shareholders; 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 shareholder 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 shareholders entitled to vote at the
Meeting was the close of business on April 4, 2000 (the "Record Date"), at which
time the Company had issued and outstanding 11,679,355 shares of Common Stock
(net of 3,442,250 treasury shares), $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
per share of Common Stock and each holder of shares of Series A Preferred Stock
is entitled to 16.667 votes per share of Series A Preferred Stock 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 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.
4
<PAGE> 5
PROPOSAL NO. 1
ELECTION OF DIRECTORS
There are five directors to be elected for terms expiring at the Company's
Annual Meeting of Shareholders in 2001 or until they're respective successors
are elected and qualified. Roland Scetbon, who has served as a Director of the
Company since 1996, is not seeking to be re-elected. The persons nominated for
election as directors 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. The Board of Directors recommends that the shareholders vote FOR
election of each of the directors listed below.
George K. Broady, age 61, has served as Chairman of the Board and Chief
Executive Officer of the Company since March 1991, and served as President of
the Company from March 1991 to August 1997. From 1988 to 1991, Mr. Broady was
the President and owner of Geneva Merchant Bankers of Dallas, Texas. Prior to
1988, Mr. Broady was Chairman and Chief Executive Officer of Network Security
Corporation, a publicly held company that he founded in 1971 and which was sold
in 1987. Mr. Broady received his Bachelor of Science degree from Iowa State
University in 1960.
Charles C. Neal, age 41, became a Director of the Company in May 1994. Mr.
Neal 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. Mr. Neal is a director of four privately held
corporations and several civic organizations. Mr. Neal received his Bachelor of
Arts degree in Economics from the University of Oklahoma in 1981 and a Juris
Doctor/Masters of Business Administration degree from the University of Chicago
Law School and Graduate School of Business in 1985.
Robert F. Sexton, age 65, became a Director of the Company in May 1995. Mr.
Sexton has been President of Bakery Associates, Inc., a Dallas based company
which brokers packaging for bakery goods, since 1983. From 1973 to 1983, Mr.
Sexton was Executive Vice President and a director of Campbell Taggart, Inc., a
baking company. Mr. Sexton is also a director of Republic Group, Inc., a New
York Stock Exchange-listed manufacturer and distributor of gypsum, wallboard and
paper products. Mr. Sexton earned his Bachelor of Business Administration degree
in Industrial Management in 1956 from the University of Texas.
George Vincent Broady, age 32, became a Director of the Company in June
1999. Mr. Broady is the son of George K. Broady, Chairman of the Board and
Chief Executive Officer of the Company, and co-founder and current editorial
director since 1996 of GameSpot.com (Spot Media, Inc.), based in San Francisco,
California, the world's most popular website for information on computer games.
He sold his interest in GameSpot to Ziff-Davis Inc-ZD Net, a publicly traded
company, in a stock transaction at the time of ZD Net's public offering in March
1999. Prior to this, Mr. Broady served as the executive editor of Multimedia
World magazine, a subsidiary of PC World magazine from 1993 to 1995. From 1992
to 1993 he was marketing director for Ultrak's consumer/do-it-yourself group.
Mr. Broady served as President of Verdict TeleReviews, Inc., located in Dallas,
Texas from 1990 to 1992, where he was a co-founder of the first pay-per-call
review service for computer games. Mr. Broady received his Bachelor of Arts
degree in Religious Studies from Brown University in 1990.
Malcolm J. Guddis, age 58, became a Director of the Company in June 1999.
Mr. Guddis retired in January 1993 as senior vice president (international and
global industries) and a member of the Board of Directors of Electronic Data
Systems Corporation ("EDS"), a Dallas based company that provides consulting and
business process management of computers, networks, information processing and
business operations. He also served on the EDS Leadership Council. Prior to
joining EDS, Mr. Guddis served in marketing and management positions for two
Fortune 500 corporations. He also founded a California computer leasing and
marketing company in 1968 and served as its Chief Executive Officer. Mr. Guddis
currently serves on the Advisory Boards of the Fisher Graduate School of
Business at Ohio State University and the Shelter of Christian Ministries
located in Dallas, Texas. He is also a director of the Episcopal School of
Dallas and the Carnegie Council on Ethics and International Affairs located in
New York. Mr. Guddis earned his Bachelor of Science degree in finance and
marketing in 1964 from Ohio State University.
5
<PAGE> 6
BOARD OF DIRECTORS AND COMMITTEES
The Company has an Audit Committee and a Compensation Committee to assist
the Board of Directors.
The Audit Committee, which was composed of Messrs. Neal, Sexton, and Guddis
through March 31, 2000, with Mr. Sexton serving as Chairman, 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
1999.
The Compensation Committee, which was composed of Messrs. Neal, Sexton and
Guddis through March 31, 2000, with Mr. Neal serving as Chairman, 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
plans. The Compensation Committee met five times in 1999.
During 1999, there were two regularly scheduled meetings and six 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.
EXECUTIVE OFFICERS
The current executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------- --- -------------------------------------------------
<S> <C> <C>
George K. Broady............. 61 Chairman of the Board and Chief Executive Officer
Theodore J. Wlazlowski....... 46 Executive Vice President
Tim D. Torno................. 43 Vice President-Finance, Assistant Secretary,
Treasurer and Chief Financial Officer
</TABLE>
- ------------
See "Election of Directors" for business experience information concerning Mr.
Broady.
Theodore J. Wlazlowski joined the Company as Executive Vice President in
January 1998. Prior to his employment by Ultrak, Inc., Mr. Wlazlowski was the
Senior Vice President of Business Development for Siebe Environmental Controls
Corporation from August 1990 to January 1998. From December 1988 to August 1990,
Mr. Wlazlowski was the Executive Vice President of Solidyne, Inc. Mr. Wlazlowski
received a Bachelor of Science Degree in Marketing and Finance (magna cum laude)
from Seton Hall University in 1976.
Tim D. Torno has been the Vice President-Finance, Treasurer and Chief
Financial Officer of the Company since August 1988, Secretary (1991-February
1999) and Assistant Secretary since February 1999. From May 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 Bachelor of Business Administration degree in Accounting (cum laude)
from Texas A & M University in 1979 and a Masters of Business Administration
degree (with honors) in 1993 from the University of Phoenix in Denver, Colorado
and is a Certified Public Accountant in the State of Texas.
6
<PAGE> 7
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 1999 for services
rendered to the Company during the fiscal years ended December 31, 1999, 1998
and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
- ----------------------------------------------------------------------------------- COMPENSATION
SECURITIES AWARDS
NAME AND UNDERLYING ---------------
PRINCIPAL OPTIONS/ ALL OTHER
POSITION YEAR SALARY BONUS SARS(1) COMPENSATION(2)
--------- ---- ------ ----- ---------- ---------------
<S> <C> <C> <C> <C> <C>
George K. Broady, 1999 $ 385,000 -- -- $ 3,003
Chief Executive
Officer 1998 $ 385,046(3) -- -- $ 5,000
1997 $ 357,286 -- 20,795 $ 2,522
Theodore J. 1999 $ 200,000 -- 45,000 $ 3,031
Wlazlowski,
Executive Vice 1998 $ 173,477(3) $100,000(4) 40,000 $ 843
President
Tim D. Torno, 1999 $ 187,200 $ 5,000 -- $ 5,000
Vice President-
Finance, Assistant 1998 $ 193,113(3) -- -- $ 5,000
Secretary and
Treasurer 1997 $ 176,656 -- 9,704 $ 2,842
</TABLE>
- ------------
(1) SARs are defined as stock appreciation rights.
(2) Contribution to employee's 401(k).
(3) Includes 27 pay periods in 1998.
(4) Mr. Wlazlowski's 1998 bonus was paid pursuant to the terms of his employment
agreement.
7
<PAGE> 8
OPTION GRANTS IN LAST FISCAL YEAR
The table below shows information on grants of stock options to the Named
Officers under the 1988 Plan and the 1997 Plan (as defined below), during the
fiscal year ended December 31, 1999, which options are reflected in the Summary
Compensation Table.
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
------------------------------------------------------ --------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING GRANTED TO EXERCISE PRICE ON
OPTIONS EMPLOYEES IN PRICE DATE OF EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SHARE) GRANT DATE 5% 10%
- ------------------- ----------- ------------ --------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
George K. Broady... None(a)
Theodore J.
Wlazlowski......... 20,000(b) 5.5% $ 6.19 $ 6.19 03/30/2009 $ 77,994 $ 196,842
25,000(b) 6.9% $ 6.063 $ 6.063 12/16/2009 95,492 241,004
------ ----- --------- ---------
45,000 12.4% $ 173,486 $ 437,846
------ ----- --------- ---------
Tim D. Torno....... None(a)
</TABLE>
- ------------
(a) There were no options granted in 1999 under either the 1988 Plan or the 1997
Plan (as defined below) to Messrs. Broady or Torno.
(b) Options granted under the 1988 Plan vest in one-fifth increments over a
five-year period.
STOCK OPTION PLANS
The Company maintains two stock options plans as described below:
Ultrak, Inc. 1988 Non-Qualified Stock Option Plan (the "1988 Plan")
The Company adopted the 1988 Plan on April 15, 1988, which currently covers
an aggregate of 1,700,000 shares of Common Stock of the Company. The 1988 Plan
has previously been amended on November 1, 1991, December 28, 1993 and September
27, 1996, and was recently amended on January 24, 2000 to provide for additional
500,000 shares of Common Stock of the Company.
Pursuant to the 1988 Plan, options to purchase shares of Common Stock 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 on the market price of the Company's Common Stock as of the close of
business the day prior to 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) if more than 50% ownership of the Company is transferred, or (vi) if 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.
8
<PAGE> 9
Ultrak, Inc. 1997 Incentive Stock Option Plan (the "1997 Plan")
The 1997 Plan was adopted on May 23, 1997 and options may be granted under
the 1997 Plan to eligible employees and the non-employee directors of the
Company for the purchase of an aggregate of 400,000 shares of Common Stock of
the Company. Employees eligible under the 1997 Plan are the executive officers
and such other management employees determined by the Compensation Committee
each year. To be eligible for an option grant for a fiscal year, an otherwise
eligible employee or director must be employed by the Company or serve as a
director as of January 1 of that year. The 1997 Plan is a formula-based plan
administered by the Compensation Committee. The Compensation Committee may grant
either nonqualified stock options or incentive stock options as defined by the
Internal Revenue Code of 1986, as amended (the "Code").
Options are granted under the 1997 Plan based on the Company achieving one
or more of the following considerations for the fiscal year: (i) Economic Value
Added ("EVA"), the primary component of which is the amount of net income for
the year which exceeds a hurdle or target amount of return on shareholders'
equity, (ii) Market Value Added ("MVA"), the primary component of which is the
increase in the market value of the Company for the fiscal year as measured by
the price of the Common Stock or (iii) Budget Achievement ("Budget"), the
primary component of which is the Company meeting or exceeding its approved
financial budget for the fiscal year. Prior to December 31 of each fiscal year,
the Compensation Committee will determine the percentage that each of the above
considerations represents in the determination of grants under the 1997 Plan,
which percentages must aggregate to 100%, and the maximum number of options that
can be granted based on the fiscal year's performance ("Option Pool"), which
cannot exceed 1% of the outstanding Common Stock of the Company. Prior to
December 31 of each fiscal year, the Compensation Committee will determine the
percentage that each eligible employee and non-employee director is eligible to
receive from the Option Pool. No options were granted under the 1997 Plan during
the fiscal year ended December 31, 1999.
As of December 31, 1999, options to purchase an aggregate of 953,972 shares
of Common Stock were outstanding under both the 1988 Plan and the 1997 Plan at
exercise prices ranging from $1.20 per share to $26.75 per share. Of the total
options, options to purchase 285,934 shares were subject to options held by the
three executive officers of the Company. The option exercise price is set by the
Compensation Committee of the Board of Directors based on the market price of
the Company's Common Stock as of the close of business the day prior to the date
of grant. During 1999, 360,500 options were granted to employees of the Company
at market price. During 1999, 28,333 options were exercised by two employees and
options to purchase 237,365 shares were cancelled.
OPTION/SAR GRANTS, EXERCISES AND HOLDINGS
There were no exercises of stock options (or tandem SARs) and freestanding
SARs during 1999. The unexercised options owned by the named executive officers
as of December 31, 1999 are presented below:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-
UNEXERCISED THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES VALUE AT 12/31/99 AT 12/31/99
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE # ($) UNEXERCISABLE UNEXERCISABLE
- ----------------- --------------- ----------- ------------------ -----------------
<S> <C> <C> <C> <C>
George K. Broady -- -- 178,851/10,000 $860,977/$21,200
Theodore J.
Wlazlowski -- -- 0/45,000 $ 0/$73,375
Tim D. Torno -- -- 48,333/3,750 $118,258/$7,950
</TABLE>
- --------
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 50% during 1999 of the employee's contribution up to
6% of the employee's base salary. In 1999, Messrs. Broady, Wlazlowski and Torno
each received $3,003, $3,031 and $5,000, respectively in matching 401(k)
contributions under the program.
<PAGE> 10
During 1999, the Company provided a medical insurance program for its
full-time employees of which it paid 60% of the premium. As of December 31,
1999, the Company did not have any defined benefit retirement or
non-contributory pension plans for its employees, officers or directors.
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 to
officers, directors and/or key employees or their affiliates during 1999.
COMPENSATION OF DIRECTORS
Each director of the Company serves until the next annual meeting of the
Company's shareholders or until his successor is elected and qualified. Each
non-employee director receives an annual fee of $16,500, 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. Theodore J. Wlazlowski, Executive Vice President, and Tim D. Torno,
Vice President-Finance, Treasurer, Assistant Secretary and Chief Financial
Officer, have written employment agreements with the Company with varying terms
and provisions which provide for a one year term but automatically extend for
one year periods unless otherwise terminated upon 60 days notice prior to the
end of the one year term. The employment agreements originally set Mr. Torno's
and Mr. Wlazlowski's base salaries at $187,200 and $200,000, respectively;
however, the Board of Directors may, in its discretion, decide to compensate the
two at higher rates and has periodically elected to do so. These employment
agreements are collectively referred to as the "Employment Agreements".
The Employment Agreements also contain standard provisions relating to the
employee being entitled to participate in the 1988 Plan and the 1997 Plan and an
annual bonus program. The Employment Agreements also provide that the employee
is to be reimbursed for reasonable expenses incurred in connection with the
Company's business and certain relocation expenses. The Employment Agreements
further provide for standard paid vacations, other health and accident coverage
and insurance benefits.
The Employment Agreements provide for severance benefits under certain
circumstances. The terms "change of control," "cause," and "disability" are used
in the following description as defined in the Employment Agreements. The
Employment Agreements terminate upon the death or disability of the employee.
Under the Employment Agreements, if the Company terminates employment of either
Messrs. Torno or Wlazlowski without cause, the Company will continue
compensation and benefits for the designated period of twelve months from the
date of termination.
The Company may terminate the Employment Agreements for "cause" if the
employee commits a material breach of the agreement or any written policies or
procedures of the Company, commits any felony, willfully engages in acts that he
knew or should have known would cause material harm to Company property,
goodwill or existing business interests, engages in any violation of any civil
law, or fails to substantially perform his duties. If terminated by the Company
for any of those reasons, all benefits, including all unexercised and unvested
stock options previously granted to the employee, are cancelled and rendered
null and void. If the Company terminates the employee without cause, then all
unexercised and unvested options become exercisable immediately for the full
amount of the optioned shares.
The Employment Agreements provide that Messrs. Torno and Wlazlowski will
not, for a period of one (1) year after termination work for a competing
business, solicit former customers, solicit employees of the Company to
terminate employment, or disclose confidential or proprietary business
information, including but not limited to customer/supplier lists and related
information.
In the event that a "change of control" occurs, as defined in the Employment
Agreements and Messrs. Torno and/or Wlazlowski's employment is terminated by the
Company or by the employee, each will be entitled to receive compensation and
benefits for the designated period of twelve months from the date of termination
and all unexercised and unvested options become exercisable immediately for the
full amount of the optioned shares.
10
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Charles C. Neal, Robert F. Sexton and Malcolm J. Guddis served as members of
the Compensation Committee of the Board of Directors through March 31, 2000.
Each of Messrs. Neal, Sexton and Guddis are non-employee directors.
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. Through March 31, 2000, the Compensation Committee of the Board of
Directors of the Company was comprised of Charles C. Neal, Robert F. Sexton and
Malcolm J. Guddis, all of whom are non-employee directors.
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 shareholders of Ultrak. The
Compensation Committee has created a total compensation package in which
compensation is determined primarily on performance-based, objective criteria,
such as net income, net income per share, return on equity and returns to
shareholders through long-term appreciation of the Company's Common Stock. The
Compensation Committee would like to encourage ownership of Ultrak, Inc. Common
Stock by the executive officers and to tie a large portion of the executive
officers' compensation to the performance of the Company, in order to align
executive officers' interests more closely with shareholders' interests. The
Compensation Committee also wants to have a discretionary component to reward
exceptional individual achievement.
The Compensation Committee believes that Messrs. Broady, Torno and
Wlazlowski, as the Executive Officers of the Company, 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 them and evaluates their compensation in light
of the their performance as well as performance of the Company. The Compensation
Committee awarded Mr. Wlazlowski options to purchase 20,000 shares on March 30,
1999 and 25,000 shares on December 16, 1999 in recognition of his increased
responsibilities. No options were awarded to Messrs. Broady or Torno during the
fiscal year ended December 31, 1999.
In 1999, no payments were made to the executive officers pursuant to the
long term incentive plan for 1999. In addition, no bonuses were paid to the
executive officers in 1999, with exception of $5,000 in discretionary payments
to Mr. Torno for his performance during 1999 and an amount up to $20,000 to Mr.
Wlazlowski for a golf club membership in order to entertain clients, suppliers
and others.
The Compensation Committee reviewed the salaries and bonuses of the
executive officers in late 1999. The Compensation Committee also reviewed the
performance of executive officers and the Company during 1999. The Compensation
Committee considered the Company's growth in revenues, consummation of important
acquisitions and investments, expenses and overall financial results. Based upon
its analysis, the Compensation Committee decided not to increase the base
salaries for 2000 of Messrs. Broady and Torno, and to increase Mr. Wlazlowski's
annual base salary to $230,000.
Charles C. Neal
Robert F. Sexton
Malcolm J. Guddis
11
<PAGE> 12
The following chart compares the cumulative total shareholder return on the
Common Stock during the five fiscal years ended December 31, 1999 with the
cumulative total return on the NASDAQ Stock Market index and a self-determined
peer group. The self-determined peer group consists of nine companies actively
competing with the Company in the security industry.
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, 1994 in the 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.
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
ULTRAK, INC.
Prepared by the Center for Research in Security Prices
Produced on 4/14/00 including data to 12/31/99
<TABLE>
<CAPTION>
12/31/94 12/30/95 12/29/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ultrak, Inc. 100.0 90.4 428.1 128.9 103.5 108.8
NASDAQ Stock Market 100.0 141.3 173.9 213.1 300.4 556.0
(US Companies)
Self-Determined 100.0 67.5 71.7 66.0 36.3 69.3
Peer Group
</TABLE>
Companies in the Self-Determined Peer Group:
CHECKPOINT SYSTEMS INC.
SENTRY TECHNOLOGY CORP.
MAGAL SECURITY SYSTEMS LTD.
VICON INDUSTRIES INC.
COHU, INC.
SENSORMATIC ELECTRONICS CORPORATION
8 X 8, INC.
LORONIX INFORMATION SYSTEMS, INC.
SILENT WITNESS ENTERPRISES, LTD.
Notes:
A. Data in the chart represents monthly index levels derived from
compounded daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 12/31/94.
12
<PAGE> 13
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS 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, 1999 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 current executive officer and director, (iii) each nominee
for director and (iv) all current executive officers and directors as a group.
<TABLE>
<CAPTION>
COMMON STOCK(1) SERIES A PREFERRED STOCK(1)
------------------------------- ---------------------------------
SHARES PERCENTAGE SHARES PERCENTAGE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
George K. Broady(2) 1,963,235 16.2% 195,351 100.0%
Becker Capital Management, Inc.(3) 1,079,000 9.4% -- --
Dimensional Fund Advisors(4) 797,900 6.9% -- --
Franklin Resources, Inc.(5) 739,000 6.4% -- --
George Vincent Broady(6) 396,856 3.4% -- --
Roland Scetbon(7) 205,013 1.8% -- --
Charles C. Neal(8) 170,650 1.5% -- --
Robert F. Sexton(9) 103,066 * -- --
Tim D. Torno(10) 73,567 * -- --
Theodore J. Wlazlowski 2,000 * -- --
All executive officers and
directors as a group
(six persons)(11) 2,914,387 23.9% 195,351 100.0%
</TABLE>
- ----------
* less than 1%
(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 178,851 shares issuable upon exercise of stock options currently
exercisable or exercisable within 60 days and 406,981 shares issuable upon
conversion of shares of the Series A Preferred Stock owned by Mr. Broady.
Mr. Broady owns all 195,351 outstanding shares of Series A Preferred Stock
and each share of Series A Preferred Stock has 16.667 votes on all matters
submitted to a vote of shareholders. Through his ownership of Common Stock
and the Series A Preferred Stock, Mr. Broady controls approximately 31% of
the voting power of all outstanding shares of the Company's capital stock.
Mr. Broady's address is 1301 Waters Ridge Drive, Lewisville, Texas 75057.
(3) Becker Capital Management, Inc.'s address is 1211 SW Fifth Ave., Suite
2185, Portland, OR 97204. All information regarding Becker Capital
Management, Inc. is based on Schedule 13G, filed with the Securities and
Exchange Commission in January 2000.
(4) Dimensional Fund Advisors address is 12199 Ocean Avenue, 11th Floor, Santa
Monica, CA 90401. All information regarding Dimension Fund Advisors is
based on Schedule 13G, filed with the Securities and Exchange Commission in
February 2000.
(5) Franklin Resources, Inc.'s address is 777 Mariners Island Blvd., San Mateo,
CA 94404. All information regarding Franklin Resources is based on Schedule
13G, filed with the Securities and Exchange Commission in February 2000.
(6) Includes 314,760 shares held in trust by Cantrell Partners.
(7) All of the shares are owned by Frida, S.A., a corporation owned by Mr.
Scetbon.
(8) Comprised of 9,650 shares owned by Pantheon, Incorporated, a corporation
owned by Mr. Neal and his wife, and 161,000 shares owned by Chas. A. Neal &
Company, a corporation of which Mr. Neal is President.
(9) Includes 5,556 shares owned by Mr. Sexton's wife.
(10) Includes 48,333 shares issuable upon exercise of stock options currently
exercisable or exercisable within 60 days held by Mr. Torno.
(11) Includes shares owned and options to purchase an aggregate of 227,184
shares held by Messrs. Broady, Wlazlowski and Torno that are currently
exercisable or exercisable within 60 days.
13
<PAGE> 14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no transactions during the fiscal year ended December 31, 1999 to
which the Company or any of its subsidiaries were a party in which the amount
involved exceeds $60,000 and in which any officer, director or security holder
known to own of record or beneficially more than five percent of the Company's
stock has or had a direct or indirect material interest.
PROPOSAL NO. 2
SELECTION AND RATIFICATION 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, 1999.
If the shareholders 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, 2000. Approval and ratification of the appointment of Grant
Thornton LLP requires the affirmative vote equal to at least a majority of the
votes cast at the Meeting in person or by Proxy. 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. Notwithstanding the selection of Grant Thornton LLP, the
Board of Directors, in its discretion, may direct appointment of new independent
auditors at any time during the year if the Board of Directors feels that such a
change would be in the best interests of the Company and it shareholders. The
Board of Directors recommends that the shareholders vote FOR the approval and
ratification of Grant Thornton LLP.
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.
SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for shareholder
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 2001 Annual Meeting of Shareholders, such proposals must be
received by the Company not later than January 22, 2001. Such proposals should
be directed to Ultrak, Inc., 1301 Waters Ridge Drive, Lewisville, Texas 75057
Attention: Corporate Secretary.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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% shareholders 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, 1999, it has
complied with all Section 16(a) filing requirements applicable to its officers,
directors and greater than 10% shareholders.
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.
14
<PAGE> 15
THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 (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/ MARK L. WEINTRUB
Mark L. Weintrub
Secretary
Lewisville, Texas
April 28, 2000
15
<PAGE> 16
[ULTRAK LOGO]
1301 Waters Ridge Drive
Lewisville, Texas 75057
Tel: (972) 353-6500
Fax: (972) 353-6574
16
<PAGE> 17
ULTRAK, INC.
PROXY CARD
The undersigned hereby (i) acknowledges receipt of the Notice dated April 28,
2000 of the Annual Meeting of Shareholders of Ultrak, Inc. (the "Company") to be
held at 1301 Waters Ridge Drive, Lewisville, Texas 75057, on Friday, June 2,
2000 at 9:00 a.m., central daylight 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 the
undersigned directs that his 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 all (except as
marked to the contrary) nominees listed below
Directors: George K. Broady, Charles C. Neal, Robert F.
Sexton, Vincent Broady and Malcolm J. Guddis
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
(b) Proposal To Ratify The Selection By The Board Of
Directors Of Grant Thornton LLP As The Firm Of
Independent Certified Public Accountants And The
Ability To Appoint New Independent Auditors At Any
Time During The Year If Believed By The Board Of
Directors To Be In The Best Interests Of The Company
And Its Shareholders.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) In The Discretion 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 reverse side)
17
<PAGE> 18
(Continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED. UNLESS
OTHERWISE MARKED, THIS PROXY WILL BE VOTED FOR THE MATTERS SPECIFICALLY REFERRED
TO ABOVE.
If more than one 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 or proxies 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:
-------------------------------
Printed Name:
----------------------------
Dated:
-----------------------------------
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.
18
