1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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))
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
SPECIAL DEVICES, INCORPORATED
(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):
/ / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies: Common
Stock, par value $0.01 per share
2) Aggregate number of securities to which transaction applies: 6,279,382
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): $34.00
4) Proposed maximum aggregate value of transaction: $213,498,988
5) Total fee paid: $42,699.80
/X/ 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:
2
SPECIAL DEVICES, INCORPORATED
16830 West Placerita Canyon Road
Newhall, California 91321
(805) 259-0753
December 3, 1998
Dear Special Devices Stockholder:
We previously sent you a Proxy Statement dated November 11, 1998
relating to a Special Meeting of Stockholders of Special Devices, Incorporated
("SDI") to be held at 16830 West Placerita Canyon Road, Newhall, California, on
Thursday, December 10, 1998 at 10:00 a.m., local time. As described in the Proxy
Statement, the Special Meeting was called to allow SDI stockholders to consider
and vote upon the adoption of Amendment No. 1, dated as of October 27, 1998
("Amendment No. 1"), to the Merger Agreement (the "Merger Agreement"), dated as
of June 19, 1998 and amended and restated as of August 17, 1998 (the Merger
Agreement, as amended by Amendment No. 1, the "Amended Merger Agreement"). The
Amended Merger Agreement provides for the acquisition of SDI by SDI Acquisition
Corp., a newly-formed company organized by J.F. Lehman & Company, Inc.
As a result of developments since the time of the mailing of the Proxy
Statement, we are providing you with the attached supplement to the Proxy
Statement (the "Supplement"), which includes additional information for your
consideration of Amendment No. 1.
Your vote is important, and we urge you to give the Proxy Statement and
this Supplement your immediate attention. You have already received a proxy card
on which you can vote, and you may have already returned the card. HOWEVER, WE
HAVE ENCLOSED A SECOND PROXY CARD (AND A RETURN ENVELOPE) FOR YOUR USE, IN CASE
YOU HAVE MISPLACED THE PROXY PREVIOUSLY SENT OR YOU WISH TO CHANGE YOUR VOTE. IF
YOU HAVE ALREADY VOTED YOUR PROXY AND YOU DO NOT WISH TO CHANGE YOUR VOTE, YOU
DO NOT NEED TO RETURN THIS SECOND PROXY CARD.
On behalf of the Board of Directors, we thank you for your support and
urge you to vote FOR adoption of Amendment No. 1.
Sincerely,
/S/ THOMAS F. TREINEN
----------------------------------
Thomas F. Treinen
Chairman of the Board of Directors
3
SUPPLEMENT TO
PROXY STATEMENT DATED NOVEMBER 11, 1998
This is a Supplement to the Proxy Statement dated November 11, 1998
(the "Proxy Statement"). This Supplement contains additional information for
your consideration of Amendment No. 1 to the Merger Agreement. The capitalized
terms used in this Supplement and not defined herein shall have the meanings
ascribed them in the Proxy Statement.
STOCKHOLDER LITIGATION
As reported in the August Proxy Statement and the Proxy Supplement to
the August Proxy Statement (both of which are attached as Appendices B and C,
respectively to the Proxy Statement), three purported stockholder class action
lawsuits were filed in the Delaware Court of Chancery challenging the Merger.
These lawsuits alleged, among other things, that the directors of SDI violated
their fiduciary duties to SDI by failing to obtain sufficient consideration for
the Merger and by failing to disclose material information in the Proxy
Statement.
On November 30, 1998, SDI learned of a fourth purported stockholder
class action lawsuit filed in the Delaware Court of Chancery challenging the
Merger. The lawsuit, filed by Paul Packer, purportedly on behalf of himself and
other stockholders of SDI as of October 15, 1998, is brought against J. Nelson
Hoffman, Jack B. Watson, Thomas F. Treinen, Samuel Levin, Donald A. Bendix, John
M. Cuthbert, Robert S. Ritchie, and SDI. The lawsuit essentially charges the
individual defendants with breaching their fiduciary duties to the public
stockholders of SDI by allegedly failing to obtain adequate consideration for
the Merger. The Complaint alleges, INTER ALIA, that the terms of the merger are
unfair, that the consideration to be paid to the public shareholders of SDI is
unfair, inadequate and substantially below the fair market value of the company,
that the individual defendants failed to take steps to enhance SDI's value, that
they failed to effectively expose the company in the marketplace, and that they
are favoring their own interests at the expense of the public stockholders. SDI
has just been served with the Complaint and the individual defendants have not
yet been served. Management disputes all of plaintiff's material allegations and
believes that this lawsuit, like the three previously-filed purported
stockholder class action lawsuits, is without merit.
As further reported in the Proxy Supplement to the August Proxy
Statement, the plaintiffs and defendants agreed in the first three purported
class actions to enter into a memorandum of understanding ("MOU"), evidencing
the parties' agreement on the material terms of a settlement of the litigation.
SDI and its counsel are continuing in discussions with counsel for the
plaintiffs in all of these actions and it is possible that the actions will
still be settled. Whether or not a settlement is reached, SDI will proceed with
the meeting of Stockholders on December 10, 1998 and, if approved, close the
transaction soon thereafter. SDI will vigorously defend the actions if they are
not settled. Any settlement will be subject to approval by the Delaware Court of
Chancery.
4
RECENT DEVELOPMENTS
SDI recently announced preliminary unaudited results for the fiscal
year and fourth quarter ended October 31, 1998. For the fiscal year, net sales
are expected to be approximately $170.5 million, a 21.4% increase over fiscal
year 1997. For the fourth quarter, net sales are expected to be approximately
$41.3 million, a decrease of 4.4% from the fourth quarter of fiscal year 1997,
while earnings before interest, taxes, depreciation and amortization are
expected to be greater than earnings before interest, taxes, depreciation and
amortization generated in the fourth quarter of fiscal year 1997. Results for
the Automotive Products Division for the fourth quarter of fiscal year 1998 were
adversely affected by the 54-day United Auto Workers strike at General Motors
and continued weakness in the Asian market, resulting in reduced purchases by
certain customers. Results for the Aerospace Division increased over the prior
year due primarily to sales of a proprietary bomb ejector product and increased
demand for products used in commercial satellite launch vehicles.
5
PROXY
SPECIAL DEVICES, INCORPORATED
Proxy Solicited on Behalf of the Board of Directors
The undersigned, revoking all previous proxies, hereby appoints Thomas F.
Treinen, John M. Cuthbert and John T. Vinke (the "Proxies"), or any of them
acting individually, as the proxy of the undersigned, with full power of
substitution, to vote, as indicated below and in their discretion upon such
other matters as may properly come before the meeting, all shares which the
undersigned would be entitled to vote at the Special Meeting of Special Devices,
Incorporated ("SDI") to be held at SDI's offices located at 16830 West Placerita
Canyon Road, Newhall, California 91321, on December 10, 1998 at 10:00 a.m.,
local time and at any postponement or adjournment thereof.
Please date and sign your Proxy on the reverse side and return it promptly.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
- --------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
6
1. To approve and adopt an amendment to the Agreement and Plan of Merger, dated
as of June 19, 1998 and amended and restated as of August 17, 1998 (the "August
Merger Agreement"), by and between SDI and SDI Acquisition Corp.
("Acquisition"), pursuant to Amendment No. 1 ("Amendment No. 1), dated as of
October 27, 1998 (the August Merger Agreement, as amended by Amendment No. 1,
the "Amended Merger Agreement"), and the merger of Acquisition into SDI as
provided for in the Amended Merger Agreement.
[ ] For [ ] Against [ ] Abstain
2. In accordance with their best judgment, the Proxies are authorized to
transact and vote upon such other business as may properly come before the
Special Meeting and any postponement or adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS OTHERWISE
SPECIFIED, THE SHARES WILL BE VOTED "FOR" THE APPROVAL OF AMENDMENT NO. 1 AND
THE MERGER DESCRIBED ON THE REVERSE SIDE HEREOF. THIS PROXY ALSO DELEGATES
DISCRETIONARY AUTHORITY WITH RESPECT TO ANY OTHER BUSINESS WHICH MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING AND
PROXY STATEMENT.
Signature(s) Date:
---------------------------------------------- ----------------
NOTE: PLEASE SIGN THIS PROXY EXACTLY AS NAME(S) APPEAR ON YOUR STOCK
CERTIFICATE. WHEN SIGNING AS ATTORNEY-IN-FACT, EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE ADD YOUR TITLE AS SUCH, AND IF SIGNER IS A CORPORATION,
PLEASE SIGN WITH FULL CORPORATE NAME BY A DULY AUTHORIZED OFFICER OR OFFICERS
AND AFFIX THE CORPORATE SEAL. WHERE STOCK IS ISSUED IN THE NAME OF TWO (2) OR
MORE PERSONS, ALL SUCH PERSONS SHOULD SIGN.
- --------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --