ITEM 2. PROPERTIES.
The Company's manufacturing, research and general office operations are conducted at its 92,000 square foot facility at 130 Perinton Parkway, Fairport, New York. This plant was financed by an industrial development bond issue and the bond is secured by a lien on the land and building and other assets acquired with the bond proceeds.
The Company also leases small amounts of office space for its regional distribution center in Hixson, Tennessee, and Auburn, California.
Internationally, the Company has leased a 70,000 square foot manufacturing facility in Southeast Asia and has branch offices/distribution centers located in Australia, France and Hong Kong.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
On January 26, 1995, the Company reached a settlement with C & K Systems on patent infringement suits commenced in fiscal 1993. The settlement was reached through an exchange of patent rights.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the Company's fourth quarter ending March 31, 1995.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS.
The Company's common stock trades on The Nasdaq Stock Market under the symbol: DETC. The information regarding the price range of the Company's Common Stock presented on page 16 of the Company's 1995 Annual Report to Shareholders ("Annual Report") is incorporated herein as Exhibit 1. On June 23, 1995, the closing price, as reported by The Nasdaq Stock Market, was $6.625 per share.
The Company has never paid cash dividends on its Common Stock. The Company presently intends to retain all future earnings, if any, for the operation and expansion of its business and does not expect to pay any cash dividends on its Common Stock in the foreseeable future.
The Company's industrial development bond issued to finance the Company's Fairport plant limits the amount of dividends the Company may declare or pay in any fiscal year to 50% of its net income for the preceding fiscal year.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
Interim quarterly results for the Company over the past three years were as follows (thousands of dollars, except per share data):
INCOME Fiscal Year Ending NET GROSS NET PER March 31, SALES MARGIN INCOME SHARE - ------------------ ------ ------ ------ ----- Fourth Quarter $8,075 $3,193 $ 27 -- Third Quarter 9,416 3,759 569 $.20 Second Quarter 8,672 3,362 460 .16 First Quarter 8,173 3,192 458 .16
Fourth Quarter $8,145 $3,069 $402 $.14 Third Quarter 8,300 3,257 437 .15 Second Quarter 8,589 3,272 431 .15 First Quarter 6,321 2,215 5 --
Fourth Quarter $8,265 $3,399 $517 $.18 Third Quarter 7,485 2,796 339 .12 Second Quarter 6,732 2,473 216 .08 First Quarter 6,949 2,728 365 .13
The Company's five year summary of operations is included as Exhibit 10 to this Form 10-K.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Management's discussion and analysis of financial condition and results of operations is included as Exhibit 2 of this Form 10-K.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Pages 17 through 24 of the Company's Annual Report for the year ended March 31, 1995 contain the information required by Item 8 of Form 10-K. This information is also included as Exhibit 3 of this Form 10-K.
ITEM 9.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Name and Age Position, Offices Held and Year Appointed Karl H. Kostusiak (56) President (1968)
David B. Lederer (55) Executive Vice President, (1968)
George E. Behlke (37) Vice President, Engineering (1995)
R. Wayne Carlton (58) Vice President, National Sales (1993)
Frank J. Ryan (41) Vice President, Secretary and Treasurer (1982)
Lawrence R. Tracy (48) President, Detection Systems, International, Inc., a subsidiary of Detection Systems, Inc. (1995)
Each officer is elected to serve until the first meeting of the Board of Directors held after the next annual meeting of shareholders and until his successor is elected and has qualified. There is no family relationship between any of the above officers.
Messrs. Kostusiak and Lederer have been President and Executive Vice President of the Company since it was formed in 1968. Mr. Ryan has been employed by the Company in various financial positions since 1980 and was promoted to Vice President in 1989. Mr. Carlton has been employed by the Company in various sales positions since 1975 and was promoted to Vice President in 1994. Mr. Tracy was hired in February 1995 as President of the Company s Detection Systems, International, Inc. subsidiary. Mr. Behlke has been employed by the Company in various engineering positions since 1977 and was promoted in May 1995 to Vice President.
The Company's Proxy Statement for the 1995 Annual Meeting of Shareholders contains the other information required by Item 10 of Form 10- K. That information is incorporated in this report as Exhibit 5.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
The Company's Proxy Statement for the 1995 Annual Meeting of Shareholders contains the information required by Item 11 of Form 10-K. That information is incorporated in this report as Exhibit 5.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The Company has stock purchase agreements with Messrs. Kostusiak and Lederer which could in the future result in a change of control of the registrant. These agreements are included as Exhibit 4 of this Form 10-K.
The Company's Proxy Statement for the 1995 Annual Meeting of Shareholders contains the information required by Item 12 of Form 10-K. The Proxy is included in this Form 10-K as Exhibit 5.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In the last fiscal year the Company and its subsidiaries contracted with Adair & Stoner, of which Mr. Adair, a Director of the Company, is a partner, for legal services rendered for the Company and its ECI subsidiary. In addition, Mr. McIrvine, another Director of the Company, performed consulting work for the Company during the last fiscal year. Messrs. Adair and McIrvine also serve as members of the compensation and stock option committees of the Board of Directors.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(I) and (2) The financial statements and schedules are included in Exhibit 3 of this Report on Form 10-K. (a)(3) See Exhibit Index attached to this Report on Form 10-K.
(b) No reports on Form 8-K have been filed during the last quarter of the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DETECTION SYSTEMS, INC. (Registrant)
Date: June 27, 1995 By: /s/ Karl H. Kostusiak Karl H. Kostusiak President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
Karl H. Kostusiak President and Director June 27, 1995 Karl H. Kostusiak (Principal Executive Officer)
Frank J. Ryan Vice President June 27, 1995 Frank J. Ryan Secretary/Treasurer (Principal Financial Officer and Principal Accounting Officer)
Donald R. Adair Director David B. Lederer Director
By: /s/ Karl H. Kostusiak Attorney-in-Fact June 27, 1995 Karl H. Kostusiak
EXHIBIT INDEX
Item Exhibits Location
3 Certificate of Incorporation Incorporated by reference to Exhibits 3(a) of the Company's 1993 Annual Report on Form 10-K
3 By-Laws as amended Incorporated by reference to Exhibits 3(b) of the Company's 1993 Annual Report on Form 10-K
4(a) Rights of Holders of common Incorporated by reference to Exhibit 4 stock - 1981 plan of the Company's 1993 Annual Report on Form 10-K
6 5-year summary of operations Included as Exhibit 11 of this Form 10-K.
10(a)Non-employee director stock Incorporated by reference to Exhibit option plan (warrant plan) 10(a) of the Company's 1994 Annual Report on Form 10-K
10(b) Medical reimbursement plan Incorporated by reference to Exhibit 10(b) of the Company's 1994 Annual Report on Form 10-K
10(c) Employee stock purchase plan Incorporated by reference to Exhibit 10(c) of the Company's 1994 Annual Report on Form 10-K
10(d) Line of credit agreements Included as Exhibit 6 of this Form 10K
10(e) Industrial Development Bond Incorporated by reference to Exhibit 10 Purchase Agreement, Bond, of the Company's fiscal 1982 Annual Lease Agreement, Mortgage Report on Form 10-K and Guaranty
10(f) Deferred Compensation Plan Incorporated by reference to Exhibit 10 of the Company's 1993 Annual Report on Form 10-K
10(g) 1992 Stock Option Plan Incorporated by reference to Exhibit 10(c) of the Company's 1994 Annual Report on Form 10-K
10(h) Key employee bonus plan Incorporated by reference to Exhibit 10(h) of the Company's 1994 Annual Report on Form 10-K
10(i) Executive employment Included as Exhibits 7 and 8 of this contracts Form 10-K
10(j) License and Mfg. Agreement Incorporated by reference to Exhibit Amendment No. 1 w/ ECI 10(j) of the Company's 1994 Annual Report on Form 10-K
10(k) Shareholders Agreements w/ Incorporated by reference to Exhibit ECI and AMS 10(k) of the Company's 1994 Annual Report on Form 10-K
11 Statement re: Computation Included as Exhibit 9 of this Form 10-K of Per Share Earnings
12 Stock Purchase Agreements Included as Exhibit 4 of this Form 10-K
17 Proxy Statement Included as Exhibit 5 of this Form 10-K
24 Report of Independent Included as Exhibit 12 of this Form Accountants of Financial 10-K Statement Schedules
25 Powers of Attorney Included as Exhibit 10 of this Form 10-K
26 Annual Report to Shareholders Incorporated by reference to paper copies of the Company's Annual Report to Shareholders mailed to the Securities and Exchange Commission and The Nasda Stock Market on June 22, 1995.
Schedule 8 - Reserves Included as Exhibit 13 of this Form 10-K
Computation of Net Income Included as Exhibit 9 of this Form 10-K
EDGAR EXHIBITS
Exhibit 1 Price Range of Common Stock
Exhibit 2 Management Discussion and Analysis
Exhibit 3 Financial and other Reports from 1995 Annual Report --Report of Independent Accountant Consolidated Balance Sheet --Consolidated Statement of Income and Retained Earnings --Consolidated Statement of Cash Flows --Notes to Consolidated Financial Statements
Exhibit 4 Stock Purchase Agreements --Karl H. Kostusiak --David B. Lederer
Exhibit 5 1995 Proxy Statement
Exhibit 6 Credit Agreements --Fleet Bank (previously Norstar Bank) --Chemical Bank
Exhibit 7 Employment Agreements --Karl H. Kostusiak --David B. Lederer
Exhibit 8 Employment Agreement --Lawrence R. Tracy
Exhibit 9 Computation of Per Share Earnings Statement
Exhibit 10 Powers of Attorney --Donald R. Adair --Mortimer B. Fuller III --Edward C. McIrvine
Exhibit 11 5-Year Summary of Operations
Exhibit 12 Report of Independent Accountants of Financial Statement Schedules
Exhibit 13 Schedule 8 Reserves Statement
Exhibit 27 Financial Data Schedule