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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period from to
--------------- --------------
Commission file number 0-26140
MINORPLANET SYSTEMS USA, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 51-0352879
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1155 Kas Drive, Suite 100, Richardson, Texas 75081
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 301-2000
@Track Communications, Inc., December 31
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Number of Shares Outstanding as of
Title of each class August 12, 2002
- ---------------------------- ----------------------------------
Common Stock, $.01 par value 48,349,161
MINORPLANET SYSTEMS USA, INC. AND SUBSIDIARIES
Form 10-Q
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1 Consolidated Financial Statements:
Consolidated Balance Sheets at June 30, 2002
and December 31, 2001 3
Consolidated Statements of Operations for the
three and six months ended June 30, 2002 and 2001 4
Consolidated Statements of Cash Flows for the six
months ended June 30, 2002 and 2001 5
Consolidated Statement of Changes in Stockholders' Equity
for the six months ended June 30, 2002 6
Notes to Consolidated Financial Statements 7-11
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 12-14
Item 3 Quantitative and Qualitative Disclosures About
Market Risk 15
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 6 Exhibits and Reports on Form 8-K 16
Signatures 17
2
PART I - FINANCIAL INFORMATION
MINORPLANET SYSTEMS USA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
June 30, December 31,
2002 2001
------------ ------------
ASSETS
Current assets:
Cash and short-term investments $ 16,032 $ 14,889
Accounts receivable, net 8,711 11,470
Inventories, net 2,685 2,913
Deferred product costs - current portion 6,687 6,183
Notes receivable 4,000 --
Other current assets 2,492 592
------------ ------------
Total current assets 40,607 36,047
Network, equipment and software, net 6,309 8,583
Deferred product costs - non-current portion 2,202 4,516
License rights, net 36,535 37,848
Other assets, net 2,037 603
------------ ------------
Total assets $ 87,690 $ 87,597
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,449 $ 2,517
Telecommunications costs payable 2,303 3,584
Accrued interest payable 575 575
Deferred product revenues - current portion 8,650 7,588
Deferred service revenues - current portion 8,536 --
Other current liabilities 7,312 9,297
------------ ------------
Total current liabilities 31,825 23,561
Deferred product revenues - non-current portion 3,991 5,748
Deferred service revenues - non-current portion 362 --
Senior notes and other notes payable 14,256 14,109
------------ ------------
Total liabilities 50,434 43,418
------------ ------------
Commitments and contingencies (Note 7)
Stockholders' equity:
Common Stock 484 481
Common Stock - Class B -- --
Preferred Stock - Series E -- --
Additional paid-in capital 218,509 217,495
Accumulated deficit (181,175) (173,235)
Treasury stock (562) (562)
------------ ------------
Total stockholders' equity 37,256 44,179
------------ ------------
Total liabilities and stockholders' equity $ 87,690 $ 87,597
============ ============
See accompanying notes to consolidated financial statements.
3
MINORPLANET SYSTEMS USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share)
Three months ended Six months ended
June 30, June 30,
---------------------------- ----------------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
Revenues:
Product $ 1,794 $ 1,886 $ 3,242 $ 9,438
Ratable product 2,382 2,952 4,758 5,481
Service 11,445 12,374 22,603 24,729
----------- ----------- ----------- -----------
Total revenues 15,621 17,212 30,603 39,648
----------- ----------- ----------- -----------
Cost of revenues:
Product 1,304 1,394 2,379 7,478
Ratable product 1,861 2,410 3,775 4,502
Service 6,363 6,833 11,836 13,453
Provision for settlement of litigation (Note 7) -- 2,100 -- 2,100
----------- ----------- ----------- -----------
Total cost of revenues 9,528 12,737 17,990 27,533
----------- ----------- ----------- -----------
Gross profit 6,093 4,475 12,613 12,115
----------- ----------- ----------- -----------
Expenses:
General and administrative 2,839 3,156 6,040 6,549
Customer service 1,272 1,944 2,543 3,945
Sales and marketing 3,047 989 6,313 2,148
Engineering 484 1,981 1,055 3,497
Network services center 54 460 427 869
Depreciation and amortization 1,495 1,819 3,324 3,404
----------- ----------- ----------- -----------
9,191 10,349 19,702 20,412
----------- ----------- ----------- -----------
Operating loss (3,098) (5,874) (7,089) (8,297)
Interest income 295 125 390 308
Interest expense (529) (2,950) (1,058) (6,292)
Other income (loss) (183) -- (183) --
----------- ----------- ----------- -----------
Loss before income taxes and extraordinary item (3,515) (8,699) (7,940) (14,281)
Income tax provision -- -- -- --
----------- ----------- ----------- -----------
Loss before extraordinary item (3,515) (8,699) (7,940) (14,281)
Extraordinary item, net -- 59,461 -- 59,461
----------- ----------- ----------- -----------
Net income (loss) $ (3,515) $ 50,762 $ (7,940) $ 45,180
=========== =========== =========== ===========
Basic and diluted income (loss) per share:
Loss before extraordinary item $ (0.07) $ (0.88) $ (0.16) $ (1.91)
Extraordinary item -- 6.03 -- 7.96
----------- ----------- ----------- -----------
Net income (loss) per share $ (0.07) $ 5.15 $ (0.16) $ 6.05
=========== =========== =========== ===========
Weighted average number of shares outstanding:
Basic and diluted 48,328 9,849 48,193 7,471
=========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
4
MINORPLANET SYSTEMS USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands, except share information)
Six months ended
June 30,
----------------------------
2002 2001
----------- -----------
Cash flows from operating activities:
Net (loss) income $ (7,940) $ 45,180
Adjustments to reconcile net (loss) income to cash used in
operating activities:
Extraordinary item - non-cash portion -- (56,682)
Depreciation and amortization 2,012 3,404
Amortization of license rights 1,312 --
Amortization of discount on notes payable 29 189
Provision for bad debts 582 825
Non-cash compensation 532 --
Amortization of deferred service revenues (3,350) --
Changes in operating assets and liabilities:
Decrease in accounts receivable 2,374 2,413
(Increase) decrease in inventory (627) 3,348
Decrease in deferred product costs 1,810 3,695
(Increase) decrease in other assets (2,121) 294
Increase (decrease) in accounts payable 1,932 (4,985)
Decrease in deferred product revenues (695) (4,403)
Decrease in accrued expenses and other liabilities (4,587) (4,476)
----------- -----------
Net cash used in operating activities (8,737) (11,198)
----------- -----------
Cash flows from investing activities:
Net proceeds from sale of assets 2,740 --
Additions to network, equipment and software (570) (1,100)
Purchase of license rights -- (1,050)
Purchases of short-term investments (760) --
----------- -----------
Net cash provided by (used in) investing activities 1,410 (2,150)
----------- -----------
Cash flows from financing activities:
Proceeds from sale of service contract 7,260 --
Payments on capital leases (35) --
Proceeds from issuance of common stock -- 9,450
Proceeds from exercise of stock options 485 --
----------- -----------
Net cash provided by financing activities 7,710 9,450
----------- -----------
Increase (decrease) in cash and cash equivalents 383 (3,898)
Cash and cash equivalents, beginning of period 10,755 20,641
----------- -----------
Cash and cash equivalents, end of period 11,138 16,743
Short-term investments, end of period 4,894 --
----------- -----------
Cash and short-term investments, end of period $ 16,032 $ 16,743
=========== ===========
Supplemental cash flow information:
Interest paid $ 994 $ 4,228
=========== ===========
Non-cash investing and financing activities:
Note receivable received as proceeds from sale of assets and service contract $ 12,000 $ --
=========== ===========
Receivable held in escrow received as proceeds from sale of
assets and service contract $ 1,000 $ --
=========== ===========
Purchases of assets through capital leases $ 224 $ --
=========== ===========
Fair value of License Rights acquired in exchange for 28,000,000
shares of common stock $ -- $ 38,000
=========== ===========
Principal amount of Senior Notes exchanged for 12,670,497 shares
of common stock $ -- $ 80,022
=========== ===========
See accompanying notes to consolidated financial statements.
5
MINORPLANET SYSTEMS USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands, except share information)
Preferred Stock Common Stock
Series E Common Stock Class B
----------------- ------------------- ----------------
Shares Amount Shares Amount Shares Amount
------- ------- ---------- ------- ------- -------
Stockholders' equity at December 31, 2001 1 $ -- 48,118,253 $ 481 -- $ --
Exercise of stock options 306,707 3
Acceleration of vesting on stock options
Net loss
------- ------- ---------- ------- ------- -------
Stockholders' equity at June 30, 2002 1 $ -- 48,424,960 $ 484 -- $ --
======= ======= ========== ======= ======= =======
Additional Treasury Stock
Paid-in ---------------- Accumulated
Capital Shares Amount Deficit Total
---------- ------- ------- ----------- -------
Stockholders' equity at December 31, 2001 $ 217,495 75,799 $ (562) $ (173,235) $44,179
Exercise of stock options 482 485
Acceleration of vesting on stock options 532 532
Net loss (7,940) (7,940)
---------- ------- ------- ----------- -------
Stockholders' equity at June 30, 2002 $ 218,509 75,799 $ (562) $ (181,175) $37,256
========== ======= ======= =========== =======
See accompanying notes to consolidated financial statements.
6
MINORPLANET SYSTEMS USA, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements
(Unaudited)
1. BUSINESS OVERVIEW
Minorplanet Systems USA, Inc., a Delaware Corporation (the "Company" or
"MNPL") develops and implements mobile communications solutions, including
integrated voice, data and position location services. The initial application
for the Company's wireless enhanced services has been developed for, and is
marketed and sold to, companies that operate in the long-haul trucking market.
The Company provides long-haul trucking companies with a comprehensive package
of mobile communications and management information services, thereby enabling
its trucking customers to effectively monitor the operations and improve the
performance of their fleets. The initial product application was customized and
has been sold to and installed in the service vehicle fleets of the member
companies of SBC Communications, Inc., pursuant to the service vehicle contract
(the "Service Vehicle Contract" or "Contract"). During the fourth quarter of
1999, the Company entered the mobile asset tracking market with the introduction
of its trailer-tracking product, TrackWare(R) . There were no significant
revenues from TrackWare(R) during the three and six month periods ending June
30, 2001 or 2002. During the first quarter of 2001, the Company began marketing
and selling 20/20V(TM), a low-cost tracking product designed for small and
medium sized fleets in the transportation marketplace. There were no significant
revenues from 20/20V during the three and six month period ending June 30, 2001
or 2002. During the third quarter of 2001, the Company commenced marketing the
Vehicle Management Information (TM) ("VMI") product licensed from Minorplanet
Limited into the automatic vehicle location ("AVL") market in the United States.
On March 15, 2002, MNPL completed the sale to Aether Systems, Inc.
("Aether") of certain assets and licenses related to MNPL's long-haul trucking
and asset-tracking businesses pursuant to an Asset Purchase Agreement effective
as of March 15, 2002, by and between MNPL and Aether (the "Sale"). Under the
terms of the Asset Purchase Agreement, MNPL sold to Aether assets and related
license rights to its Platinum Service software solution, 20/20V(TM), and
TrackWare(R) asset and trailer-tracking products. In addition, MNPL and Aether
agreed to form a strategic relationship with respect to MNPL's long-haul
customer products, pursuant to which MNPL will assign to Aether all service
revenues generated post-closing from its HighwayMaster Series 5000 ("HM5000")
customer base. Aether, in turn, has agreed to reimburse MNPL for the network and
airtime service costs related to providing the HM5000 service. The two companies
have also agreed to work jointly in the adaptation of the VMI product technology
for the potential distribution of VMI by Aether to the long-haul-trucking market
(See Note 4).
2. BASIS OF PRESENTATION
The unaudited consolidated financial statements presented herein have
been prepared in accordance with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all footnote disclosures
required by accounting principles generally accepted in the United States of
America. These consolidated financial statements should be read in conjunction
with the Company's audited financial statements for the year ended December 31,
2001. The accompanying consolidated financial statements reflect all adjustments
(all of which are of a normal recurring nature), which are, in the opinion of
management, necessary for a fair presentation of the Company's financial
position, results of operations and cash flows for the interim periods. The
results for any interim period are not necessarily indicative of the results for
the entire year.
3. REVENUE RECOGNITION
Currently, the Company resells cellular airtime to customers of its VMI
products. Therefore, in accordance with Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements" ("SAB101"), the Company defers
product revenues and recognizes this revenue ratably over the longer of the term
of the customer contract or the estimated life of the customer relationship.
Such terms range from one to five years.
7
4. SALE OF ASSETS
On March 15, 2002, MNPL completed the Sale to Aether. As consideration
for the Sale, MNPL received $3 million in cash, of which $1 million is included
on the Company's balance sheet in other current assets and will be held in
escrow and released to MNPL over a 12-month period. MNPL also received a note
for $12 million payable, at the option of Aether, in either cash or convertible
preferred stock in three equal installments of $4 million on April 14, May 14,
and June 14, 2002 (the "Note"). The preferred stock may then be converted to
common stock using a prescribed formula that compensates for fluctuations in the
stock price so that MNPL will be able to convert and sell in the open market
Aether common stock equal to $12 million. The consideration for the Sale was
determined through arms length negotiation between MNPL and Aether.
On April 12, 2002, Aether delivered an Amended and Restated Convertible
Promissory Note (the "Amended Note") to the Company. Under the Amended Note,
Aether irrevocably agreed to pay cash in lieu of preferred stock for the first
$4 million installment originally due on April 14, 2002 and extended the
installment due date by twenty business days to May 10, 2002. Additionally,
under the Amended Note, Aether had the option to irrevocably elect to pay the
May 14 and June 14, 2002 installments in cash in lieu of preferred stock upon
five days prior written notice, and upon the making of such election, the
installment due date was extended by twenty business days.
On May 9, 2002, Aether notified the Company of its election to pay the
second $4 million installment under the Amended Note in cash extending the
installment due date under the Amended Note originally due on May 14, 2002 to
June 12, 2002. On May 10, 2002, the Company received the initial $4 million
installment under the Amended Note in cash from Aether. On June 12, 2002, the
Company received the second $4 million installment under the Amended Note in
cash from Aether. On June 9,2002, Aether notified the Company of its election to
pay the third $4 million installment under the Amended Note in cash extending
the installment due date under the Amended Note originally due on June 14, 2002
to July 12, 2002. On July 12, 2002, the Company received the third $4 million
installment under the Amended Note in cash from Aether.
Proceeds from the Sale to Aether totaled $15 million, of which $12.2
million was allocated to deferred service revenue and reflects the estimated
fair value of services to be provided to Aether net of cash reimbursements from
Aether under the terms of the agreement. The deferred service revenue is being
recognized over the term of the agreement with Aether that expires in September
of 2003. The remaining proceeds were allocated to consideration for assets sold,
net of transaction costs, and no gain or loss resulted from the sale.
5. LIQUIDITY AND FUTURE OPERATIONS
The Company had approximately $16.0 million in cash and short-term
investments at June 30, 2002 compared to $14.9 million at December 31, 2001.
The Sale transaction between the Company and Aether, for the sale of certain
assets and licenses related to the Company's long-haul trucking and
asset-tracking businesses, will result in total cash proceeds of $15 million of
which $10 million was received by the Company during the six months ended June
30, 2002. An additional $4 million was received during July of 2002 and the
remaining $1 million will be released from escrow over the next fiscal year.
Total net use of cash associated with operating activities during the
six months ended June 30, 2002 was $8.7 million including a $1.0 million
semi-annual interest payment due on the Senior Notes, a $1.0 million payment
for research and development to Minorplanet Limited, a related party and
operating subsidiary of Minorplanet Systems PLC, and expenditures related to
the VMI product launch. Cash used in investing activities during the six months
ended June 30, 2002 included $0.7 million in purchases of short-term
investments and $0.6 million in expenditures related to additions of network
equipment, software, and other equipment.
The Company has incurred significant operating losses since inception
and has limited financial resources to support it until such time that it is
able to generate positive cash flow from operations. Based on projected
operating results, the Company believes its existing capital resources will be
sufficient to fund its currently anticipated operating needs and capital
expenditure requirements for the next 18 months. The critical success factor to
achieving the Company's operating goals is meeting the anticipated sales goals
pertaining to the recently acquired VMI technology.
6. OTHER ASSETS
The Company provides lease financing to certain customers of its VMI
products. Leases under these arrangements are classified as sales-type leases or
operating leases . These leases typically have terms of one to five years, and
all sales type leases are discounted at interest rates ranging from 14% to 18%
depending on the customer's credit risk.
The net present value of the lease payments for sales-type leases is
recognized as sales revenue and deferred under the Company's revenue recognition
policy. The net investment in sales-type leases, contained within other assets
on the Company's balance sheet, is composed of total minimum lease payments net
of unearned interest income and allowance for uncollectible accounts.
7. COMMITMENTS AND CONTINGENCIES
During the first quarter of 2001, the outsource manufacturer (the
"vendor") that supplied substantially all of the Company's finished goods
inventory asserted a claim for reimbursement for excess and obsolete inventory
purchased in its capacity for use in the manufacture of the Company's products.
This claim was disputed by the Company. As a result of this dispute, beginning
in April 2001, the vendor ceased to perform on its contract to provide finished
goods inventory and
8
certain other services to the Company. The claims and counterclaims ultimately
led to each of the parties filing litigation against the other. The vendor and
the Company executed a Compromise Settlement Agreement on October 9, 2001. The
ultimate liability in connection with this settlement will not be known until
December 31, 2002. Based on information currently available, the Company
recorded a provision of $2.1 million during 2001 as its estimate of the cost to
be incurred to settle this litigation, of which $0.5 million had been paid as of
June 30, 2002.
8. RELATED PARTY TRANSACTIONS
Minorplanet Systems PLC owns 62 percent of the Company's outstanding
common stock and thus controls the Company. As a result of this control,
Minorplanet Systems PLC is a related party. The Company has also agreed to pay
Minorplanet Limited, the operating subsidiary of Minorplanet Systems PLC, an
annual fee of $1.0 million to aid in funding research and development of future
products covered by the license rights. The fee is to be evaluated and may be
increased based on actual research and development costs incurred by Minorplanet
Systems PLC. Transactions with Minorplanet Systems PLC and its operating
subsidiaries are summarized below (in thousands).
Six months ended June 30, 2002 2001
---------- ------------
R&D and contract services $ 1,100 $ --
As of: June 30, December 31,
2002 2001
---------- ------------
Accounts receivable $ 70 $ 14
Accounts payable $ 625 $ 525
During the six months ended June 30, 2001, SBC Wireless LLC was
considered a related party by virtue of the control provisions afforded by the
Amended & Restated Stockholders' Agreement dated September 27, 1996 between the
Company and certain stockholders (the "Stockholders' Agreement"). As a result of
the Stock Purchase and Exchange Agreement dated February 14, 2001 by and among
the Company, Minorplanet Systems PLC, and Mackay Shields LLC consummated on June
21, 2001, the Stockholders' Agreement was terminated and such control provisions
were eliminated; thereafter, SBC Wireless LLC was no longer a related party.
Certain affiliates of SBC Wireless LLC, which is wholly owned by Cingular
Wireless, LLC, a joint venture in which SBC Communications, Inc. ("SBC") is a
lead venturer, serve as customers of and vendors to the Company. The Company
sells mobile communication units and provides services pursuant to the Service
Vehicle Contract. Additionally, one affiliated company serves as "administrative
carrier" and provides clearinghouse services, and other affiliated companies of
SBC are among the cellular carriers with whom the Company purchases wireless and
long distance airtime in connection with the Company's provision of its
services. Sales to these affiliated companies of SBC for the six months ended
June 30, 2001 are summarized below (in thousands).
Six months ended June 30, 2001
-----------
Revenues $ 15,331
9. SEGMENT REPORTING
In June 1997, the Financial Accounting Standards Board issued Statement
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131"). SFAS 131 establishes accounting standards for the way that public
business enterprises report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. The Company adopted
SFAS 131 beginning with the effective date of January 1, 1998. Prior to January
of 2002, the Company had only one reportable segment.
The Company's reportable segments offer different products and/or
services. The Company reports on these segments as management makes operating
decisions and assesses individual performances based on the performance of these
segments. Each segment also requires different technology and marketing
strategies. The Company's two reportable segments are VMI and NSC Systems.
9
During the third quarter of 2001, the Company commenced marketing the
VMI product licensed from Minorplanet Limited into the automatic vehicle
location ("AVL") marketplace in the United States. VMI is designed to maximize
the productivity of a mobile workforce as well as reduce vehicle mileage and
fuel related expenses. The VMI technology consists of: (i) a data control unit
("DCU") that continually monitors and records a vehicle's position, speed and
distance traveled; (ii) a command and control center ("CCC") which receives and
stores in a database information downloaded from the DCU's; and (iii) software
used for communication, messaging and detailed reporting. VMI uses GPS to
acquire a vehicle location on a minute-by-minute basis and a GSM based cellular
network to transmit data between the DCU's and the CCC. The VMI application is
targeted to small and medium-sized fleets in the metro marketplace which the
Company believes represents a total U.S. market of approximately 21 million
vehicles.
Through its NSC Systems segment, the Company provides long-haul
trucking companies with a comprehensive package of mobile communications and
management information services, thereby enabling its trucking customers to
effectively monitor the operations and improve the performance of their fleets.
The initial product application was customized and has been sold to and
installed in the service vehicle fleets of the member companies of SBC
Communications, Inc., pursuant to the service vehicle contract. The Company also
provides mobile asset tracking solutions with its trailer-tracking products,
TrackWare(R) and 20/20V(TM). These products use the Company's Network Service
Center ("NSC") to relay voice and messages between the mobile units and the
customer's dispatchers.
On March 15, 2002, the Company completed the Sale to Aether of certain
assets and licenses related to the Company's long-haul trucking and
asset-tracking businesses pursuant to an Asset Purchase Agreement effective as
of March 15, 2002, by and between the Company and Aether (see Note 4).
The accounting policies of the segments are the same as those described
in the summary of significant accounting policies. Operating expenses are
allocated to each segment based on management's estimate of the utilization of
resources by each segment. The following table sets forth segment financial
information (in thousands).
Three Months Ended June 30, 2002
NSC Systems VMI Consolidated
------------ ------------ ------------
Revenues $ 15,070 $ 551 $ 15,621
Operating income (loss) 3,609 (6,707) (3,098)
Interest expense 197 332 529
Interest income 247 48 295
Depreciation and amortization 566 929 1,495
Net income (loss) 3,476 (6,991) (3,515)
Total assets 44,562 43,128 87,690
Capital expenditures 61 147 208
Three Months Ended June 30, 2001
NSC Systems VMI Consolidated
------------ ------------ ------------
Revenues $ 17,212 $ -- $ 17,212
Operating loss (5,874) -- (5,874)
Interest expense 2,950 -- 2,950
Interest income 125 -- 125
Depreciation and amortization 1,819 -- 1,819
Extraordinary item, net 59,461 -- 59,461
Net income 50,762 -- 50,762
Total assets 62,816 38,862 101,678
Capital expenditures 372 -- 372
Other significant non-cash items:
Fair Value of License Rights acquired in exchange
for 28,000,000 shares of common stock -- 38,000 38,000
Principal amount of Senior Notes exchanged for
12,670,497 shares of common stock 80,022 -- 80,022
10
Six Months Ended June 30, 2002
NSC Systems VMI Consolidated
------------ ------------ ------------
Revenues $ 29,924 $ 679 $ 30,603
Operating income (loss) 5,660 (12,749) (7,089)
Interest expense 483 575 1,058
Interest income 298 92 390
Depreciation and amortization 1,485 1,839 3,324
Net income (loss) 5,292 (13,232) (7,940)
Total assets 44,562 43,128 87,690
Capital expenditures 143 427 570
Other significant non-cash items:
Note receivable received as proceeds from sale of
assets and service contract 12,000 -- 12,000
Receivable held in escrow received as proceeds from
sale of assets and service contract 1,000 -- 1,000
Purchase of assets through capital leases 224 -- 224
Six Months Ended June 30, 2001
NSC Systems VMI Consolidated
------------ ------------ ------------
Revenues $ 39,648 $ -- $ 39,648
Operating loss (8,297) -- (8,297)
Interest expense 6,292 -- 6,292
Interest income 308 -- 308
Depreciation and amortization 3,404 -- 3,404
Extraordinary item, net 59,461 -- 59,461
Net income 45,180 -- 45,180
Total assets 62,816 38,862 101,678
Capital expenditures 1,100 -- 1,100
Other significant non-cash items:
Fair Value of License Rights acquired in exchange for
28,000,000 shares of common stock -- 38,000 38,000
Principal amount of Senior Notes exchanged for
12,670,497 shares of common stock 80,022 -- 80,022
10. ACCELERATED VESTING OF STOCK OPTIONS
Effective March 15, 2002, two of the Company's executives resigned
their employment with the Company in connection with the Sale to Aether
consummated on March 15, 2002 (see Note 4). As part of their separation
agreements, vesting was accelerated on a portion of previously unvested stock
options resulting in the recording of $0.5 million in compensation expense which
is reflected in the Company's financial statements.
11. CHANGE IN FISCAL YEAR END
On May 21, 2002, the Company's Board of Directors approved changing the
Company's fiscal year end to August 31st.
12. SUBSEQUENT EVENT
On July 22, 2002, after approval from its majority shareholder,
Minorplanet Systems PLC, the Company's name was changed from @Track
Communications Inc. to Minorplanet Systems USA, Inc.
11
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
During the third quarter of 2001, the Company commenced marketing the
Vehicle Management Information ("VMI") product licensed from Minorplanet Limited
into the automatic vehicle location ("AVL") marketplace in the United States.
VMI is designed to maximize the productivity of a mobile workforce as well as
reduce vehicle mileage and fuel related expenses. The VMI technology consists
of: (i) a data control unit ("DCU") that continually monitors and records a
vehicle's position, speed and distance traveled; (ii) a command and control
center ("CCC") which receives and stores in a database information downloaded
from the DCU's; and (iii) software used for communication, messaging and
detailed reporting. VMI uses GPS to acquire a vehicle location on a
minute-by-minute basis and a GSM based cellular network to transmit data between
the DCU's and the CCC. The VMI application is targeted to small and medium sized
fleets in the metro marketplace which the Company believes represents a total
U.S. market of approximately 21 million vehicles.
VMI provides minute-by-minute visibility into the activities of a
mobile workforce via an extensive reporting system that provides real-time and
exception-based reporting. Real-time reports provide information regarding a
vehicle's location, idling, stop time, speed and distance traveled. With
real-time reporting, the user can view when an employee starts or finishes work,
job site arrival times and site visit locations. In addition, exception reports
allow the user to set various parameters within which vehicles must operate, and
the system will report exceptions including speeding, extended stops,
unscheduled stops, route deviations, visits to barred locations and excessive
idling.
Through its NSC Systems segment, the Company provides long-haul
trucking companies with a comprehensive package of mobile communications and
management information services, thereby enabling its trucking customers to
effectively monitor the operations and improve the performance of their fleets.
The initial product application was customized and has been sold to and
installed in the service vehicle fleets of the member companies of SBC
Communications, Inc., pursuant to the service vehicle contract (the "Service
Vehicle Contract" or "Contract"). The Company also provides mobile asset
tracking solutions with its trailer-tracking products, TrackWare(R) and
20/20V(TM).
On March 15, 2002, MNPL completed the sale to Aether Systems, Inc.
("Aether") of certain assets and licenses related to MNPL's long-haul trucking
and asset-tracking businesses pursuant to an Asset Purchase Agreement effective
as of March 15, 2002, by and between MNPL and Aether. Under the terms of the
Asset Purchase Agreement, MNPL sold to Aether assets and related license rights
to its Platinum Service software solution, 20/20V(TM), and TrackWare(R) asset
and trailer-tracking products. In addition, MNPL and Aether agreed to form a
strategic relationship with respect to MNPL's long-haul customer products,
pursuant to which MNPL will assign to Aether all service revenues generated
post-closing from its HighwayMaster Series 5000 (HM5000) customer base. Aether,
in turn, has agreed to reimburse MNPL for the network and airtime service costs
related to providing the HM5000 service. Hereinafter, HM5000 units for which the
Company provides network services are referred to as network services
subscribers.
RESULTS OF OPERATIONS - CONSOLIDATED
Three and Six Months Ended June 30, 2002, Compared to Three and Six
Months Ended June 30, 2001
Total revenues for the three and six months ended June 30, 2002 were
$15.6 and $30.6 million compared to $17.2 million and $39.6 million during the
three and six months ended June 30, 2001. Product revenues, including ratable
product revenue, for the same periods decreased to $4.2 million and $8.0 million
during 2002 from $4.8 million and $14.9 million during 2001. The decrease in
product revenue was primarily due to a reduction in sales related to the Service
Vehicle Contract. Service revenues for the three and six months ended June 30,
2002 were $11.4 and $22.6 million compared to $12.4 and $24.7 million for the
same periods during 2001. The decrease in service revenues is primarily
attributable to a lower average revenue per unit. Although the total installed
base, including network subscribers, increased from 68,211 at June 30, 2001 to
69,241 at June 30, 2002, the proportion of service vehicles relative to
long-haul trucking has increased resulting in a lower average revenue per mobile
unit. Average revenue for service vehicles is significantly less than that of
long-haul trucking because of different product functionality.
Total gross profit for the three and six months ended June 30, 2002 was
39% and 41% compared to 26% and 31% for the same periods during 2001. During the
first quarter of 2001, the Company received significant quantities of TrackWare
finished goods inventory, the carrying amount of which was written down by
approximately $0.6 million to
12
estimated market value. During the second quarter of 2001, the Company reached
an agreement in principle to settle the litigation with its outsource
manufacturer for reimbursement for excess and obsolete inventory. As a result of
this agreement in principle, the Company recorded a provision of $2.1 million as
its estimate of the cost to be incurred to settle this litigation. Excluding the
$2.1 million provision for legal settlement and the $0.6 million inventory
write-down, total gross profit for the three and six months ended June 30, 2001
would have been 42% and 37% respectively; the effective increase in total gross
profit margin during the six months ended June 30, 2002 is primarily
attributable to improved service and repair margins under the Service Vehicle
Contract as well as rate reductions obtained from telecommunications providers.
Operating expenses for the three and six months ended June 30, 2002
were $9.2 million and $19.7 million compared to $10.3 million and $20.4 million
during 2001. Sales and marketing costs for the six months ending June 30, 2002
increased to $6.3 million from $2.1 million during the six months ended June 30,
2001. This increase is primarily due to expenditures related to the VMI product
launch including the hiring of new sales personnel and the opening of three VMI
sales and operations offices in Dallas, Texas, Houston, Texas and Atlanta,
Georgia. Expenditures of approximately $0.6 million were also incurred for
contracted sales, training and operational support services associated with the
VMI product launch during the first quarter of 2002. The increase in sales and
marketing costs during 2002 was offset by reductions in operating expenses
across all other departments including customer service, engineering, network
services, and general and administrative. These decreases were primarily
associated with personnel reductions made as a consequence of the cancellation
of various technology initiatives, as well as personnel reductions associated
with the sale to Aether of certain assets and license rights to the Company's
long haul trucking and asset tracking businesses.
Operating losses improved to $3.1 million during the three months ended
June 30, 2002 from $5.9 million during the three months ending June 30, 2001.
The improved operating loss was primarily due to the $2.1 million legal
settlement provision recorded in 2001 and lower operating costs during 2002
associated with the personnel reductions discussed above. For the six months
ending June 30, 2002, the Company's operating loss was $7.1 million compared to
$8.3 million during the same period in 2001. The Company's ability to generate
operating income is significantly influenced by the gross margin related to
product revenues. During 2001, the Service Vehicle Contract was responsible for
the majority of product revenues. Product shipments under that contract are
expected to be significantly lower during 2002. The Company's financial
condition and results of operations are heavily dependent upon the Company's
ability to market and sell the VMI products.
RESULTS OF OPERATIONS - VMI
Three and Six Months Ended June 30, 2002
The Company began marketing the VMI product in the Dallas market during
the third quarter of 2001, the Houston market during the fourth quarter of 2001,
and the Atlanta market beginning in the first quarter of 2002. A total of 1,505
and 2,430 units were sold during the three and six months ending June 30, 2002
respectively. However, in accordance with the Company's revenue recognition
policies, revenue and the associated cost of sales are deferred under Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
101"), and recognized over the greater of the contract life or the life of the
estimated customer relationship. Therefore, VMI revenues and gross profit did
not contribute significantly to the Company's total revenue and gross profit
during 2002. Total VMI revenues during the three and six months ending June 30,
2002 were $0.6 million and $0.7 million. The Company has recorded $4.0 million
in deferred product revenue associated with VMI sales reflected on the Company's
balance sheet as of June 30, 2002.
VMI operating losses for the three and six month periods ending June
30, 2002 were $6.7 million and $12.7 million respectively as the Company began
dedicating most of its sales and marketing resources and many of its operational
resources to the launching of the VMI product in several US markets including
Dallas, Houston, and Atlanta. Total sales and marketing personnel increased
significantly during 2002 including the hiring of VMI sales personnel in the
Dallas, Houston and Atlanta offices as well as the hiring of Dallas-based
telesales personnel. As mentioned above, significant expenditures were also
incurred to open the new Houston and Atlanta offices as well as for contracted
sales, training and operational services associated with the VMI product launch.
Also, included in the 2002 operating losses is approximately $1.3 million in
amortization of the VMI license rights and $0.5 million in costs associated with
research and development of future products covered by the license rights.
13
RESULTS OF OPERATIONS - NSC SYSTEMS
Three and Six Months Ended June 30, 2002, Compared to Three and Six
Months Ended June 30, 2001
NSC Systems revenues for the three and six months ended June 30, 2002
were $15.1 million and $29.9 million compared to $17.2 million and $39.6 million
during the three and six months ending June 30, 2001. Product revenues,
including ratable product revenue, for the same periods decreased to $3.7
million and $7.5 million during 2002 from $4.8 million and $14.9 million during
2001. The decrease in product revenue was primarily due to a reduction in sales
related to the Service Vehicle Contract. Service revenues for the three and six
months ended June 30, 2002 were $11.3 and $22.5 million compared to $12.4 and
$24.7 million for the same periods during 2001. The decrease in service revenue
is primarily attributable to a lower average revenue per unit. Average revenue
for service vehicles is significantly less than that of long-haul trucking
because of different product functionality.
Total gross profit improved to 40% and 43% for the three and six months
ended June 30, 2002 in comparison to 26% and 31% for the same periods during
2001. Excluding the $2.1 million provision for legal settlement and the $0.6
million inventory write-down discussed above, total gross profit for the three
and six months ended June 30, 2001 would have been 42% and 37% respectively. The
effective increase in total gross profit margin during the six months ended June
30, 2002 is primarily attributable to improved service and repair margins under
the Service Vehicle Contract as well as rate reductions obtained from
telecommunications providers.
During the three and six months ending June 30, 2002, NSC Systems
operating expenses were $1.9 million and $5.6 million respectively in comparison
to $10.3 million and $20.4 million during 2001. Operating expenses have
decreased 73% during 2002 as the Company has re-directed most of its sales and
marketing resources and many of its operational resources from the NSC Systems
segment to the new VMI segment to focus on the VMI product launch. Also,
contributing to the reduction in NSC Systems operating costs were personnel
reductions associated with the sale of assets to Aether during the first quarter
of 2002 and the cancellation of various technology initiatives during 2001. In
addition, effective March 15, 2002, Aether began reimbursing the Company for the
operating costs associated with providing HM5000 service.
Operating income for the three and six months ended June 30, 2002 was
$3.6 million and $5.7 million compared to an operating loss of $5.9 million and
$8.3 million during 2001.
LIQUIDITY AND CAPITAL RESOURCES
The Company had approximately $16.0 million in cash and short-term
investments at June 30, 2002 compared to $14.9 million at December 31, 2001. The
Sale transaction between the Company and Aether, for the sale of certain assets
and licenses related to the Company's long-haul trucking and asset-tracking
businesses, will result in total cash proceeds of $15 million of which $10
million was received by the Company during the six months ended June 30, 2002.
An additional $4 million was received during July of 2002 and the remaining $1
million should be released from escrow over the next fiscal year provided
certain conditions are met by the Company.
Total net use of cash associated with operating activities during the
six months ended June 30, 2002 was $8.7 million including a $1.0 million
semi-annual interest payment due on the Senior Notes, a $1.0 million payment for
research and development to Minorplanet Limited, a related party and operating
subsidiary of Minorplanet Systems PLC, and expenditures related to the VMI
product launch. Cash used in investing activities during the six months ended
June 30, 2002 included $0.7 million in purchases of short-term investments and
$0.6 million in expenditures related to additions of network equipment,
software, and other equipment.
The Company has incurred significant operating losses since inception
and has limited financial resources to support it until such time that it is
able to generate positive cash flow from operations. Based on projected
operating results, the Company believes its existing capital resources will be
sufficient to fund its currently anticipated operating needs and capital
expenditure requirements for the next 18 months. The critical success factor to
achieving the Company's operating goals is meeting the anticipated sales goals
pertaining to the recently acquired VMI technology.
14
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not have any material exposure to market risk
associated with its cash and short-term investments. The Company's 13-3/4%
Senior Notes due 2005 are at a fixed rate and, thus, are not exposed to interest
rate risk.
FORWARD LOOKING STATEMENTS
This report on Form 10-Q contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, that are based upon
management's current beliefs and projections, as well as assumptions made by and
information currently available to management. When used in this Form 10-Q, the
words "anticipate," "believe," "estimate," "expect" and similar expressions are
intended to identify forward-looking statements. Any statement or conclusion
concerning future events is a forward-looking statement, and should not be
interpreted as a promise or conclusion that the event will occur. The Company's
actual operating results or the actual occurrence of any such event could differ
materially from those projected in the forward-looking statements. Factors that
could cause or contribute to such differences include those discussed in this
report, and the Company's Annual Report on Form 10-K for the year ended December
31, 2001.
15
MINORPLANET SYSTEMS USA, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's 2002 Annual Meeting of Stockholders (the "Annual
Meeting") was held on May 21, 2002. At the Annual Meeting, the
stockholders of the Company (i) elected each of the persons listed
below to serve as a director of the Company until the next Annual
Meeting of Stockholders or until their respective successors have been
duly elected and qualified; and (ii) approved the amendment to the
Company's Amended and Restated 1994 Stock Option Plan increasing the
number of shares of common stock issuable under the stock option plan
to 7,208,000 shares.
The Company had 48,314,681 shares of Common Stock outstanding
as of April 12, 2002, the record date for the Annual Meeting. At the
Annual Meeting, holders of a total of 33,063,456 shares of Common Stock
were present in person or represented by proxy. The following sets
forth information regarding the results of the voting at the Annual
Meeting:
Proposal 1: Election of Directors
Shares Voting Shares
Director In Favor Withheld
-------------------- ---------- -------
Jana A. Bell 32,907,846 155,610
Gerry C. Quinn 32,907,826 155,630
John T. Stupka 32,907,826 155,630
Robert D. Kelly MA FCA 32,904,426 159,030
Michael D. Beverley DL, DA, SCA, SRSA 32,904,271 159,185
Michael D. Abrahams, CBE DL 32,904,271 159,185
Sir James Douglas Spooner, MA, FCA 32,904,271 159,185
Sir Martin W. Jacomb 32,904,271 159,185
Proposal 2: The amendment to the Company's Amended and Restated 1994
Stock Option Plan increasing the number of shares of common stock
issuable under the stock option plan.
Votes in favor: 32,860,385
Votes against: 198,671
Abstentions: 4,400
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See the Index to Exhibits.
(b) Reports on Form 8-K -
On May 29, 2002, the Company filed a current report on Form
8-K-A reporting under Item 2 certain pro-forma financial
information regarding the Company's disposition of certain
assets on March 15, 2002 pursuant to that certain Asset
Purchase Agreement with Aether Systems, Inc.
On June 5, 2002, the Company filed a current report on Form
8-K reporting under Item 8 the Company's change in fiscal year
to August 31.
On August 6, 2002, the Company filed a current report on Form
8-K reporting under Item 4 the resignation of its independent
auditors Arthur Andersen LLP and the Company's discussions
with Deloitte Touche LLP to engage Deloitte Touche LLP as its
new independent auditors.
On August 14, 2002, the Company filed a current report on Form
8-K reporting under Item 4 the appointment and engagement of
Deloitte Touche LLP as the Company's independent auditors for
2002.
16
SIGNATURES
Pursuant to the requirements 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.
MINORPLANET SYSTEMS USA, INC.
Date: August 14, 2002
By: /s/ Jana Ahlfinger Bell
--------------------------------
Jana Ahlfinger Bell
President and Chief Executive Officer
By: /s/ W. Michael Smith
--------------------------------
W. Michael Smith
Executive Vice President and Chief Financial
Officer (Principal Financial and Accounting
Officer)
17
INDEX TO EXHIBITS
EXHIBIT
NUMBER TITLE
------ -----
2.1 - Stock Purchase and Exchange Agreement by and between the Company, Minorplanet
Systems PLC and Mackay Shields LLC, dated February 14, 2001. (21)
2.2 - Asset Purchase Agreement by and between the Company and Aether Systems, Inc.
dated March 15, 2002. (22)
3.1 - Restated Certificate of Incorporation of the Company, as amended. (29)
3.2 - Second Amended and Restated By-Laws of the Company.(20)
4.1 - Specimen of certificate representing Common Stock, $.01 par value, of the
Company.(1)
4.2 - Indenture dated September 23, 1997 by and among the Company, HighwayMaster
Corporation and Texas Commerce Bank, National Association (the "Indenture").(8)
4.3 - First Supplemental Indenture, dated June 20, 2001, to the Indenture. (28)
4.4 - Pledge Agreement dated September 23, 1997, by and among the Company, Bear,
Stearns & Co. Inc. and Smith Barney Inc.(8)
4.5 - Registration Rights Agreement dated September 23, 1997, by and among the
Company, HighwayMaster Corporation, Bear, Stearns & Co. Inc. and Smith Barney
Inc.(8)
4.6 - Warrant Registration Rights Agreement dated September 23, 1997, by and among the
Company, Bear, Stearns & Co. Inc. and Smith Barney, Inc. (8)
10.1 - Registration Rights Agreement by and between the Company, Minorplanet Systems
PLC and Mackay Shields LLC, dated as of June 21, 2001. (23)
10.2 - Exclusive License and Distribution Agreement by and between Minorplanet Limited,
(an @Track subsidiary) and Mislex (302) Limited, dated June 21, 2001 (20)
10.3 Amended and Restated 1994 Stock Option Plan of the Company, dated February 4,
1994. (1) (4) (5)
10.4 - Amendment No. 1 to the Amended and Restated 1994 Stock Option Plan . (24)
10.5 - Amendment No. 2 to the Amended and Restated 1994 Stock Option Plan. (25)
10.6 - Amendment No. 3 to the Amended and Restated 1994 Stock Option Plan.(29)
10.7 - Stock Option Agreement, dated June 22, 1998, by and between the Company and John
Stupka. (10)
10.8 - Product Development Agreement, dated December 21, 1995, between HighwayMaster
Corporation and IEX Corporation.(2)(3)
10.9 - Software Transfer Agreement, dated April 25, 1997, between HighwayMaster
Corporation and Burlington Motor Carriers, Inc.(6)(7)
10.10 - Lease Agreement, dated March 20, 1998, between HighwayMaster Corporation and
Cardinal Collins Tech Center, Inc.(9)
10.11 - September 18, 1998 Amended and Restated Stock Option Agreement of May 29, 1998
by and between the Company and Jana Ahlfinger Bell. (10)
10.12 - Stock Option Agreement, dated August 12, 1998, by and between the Company and
Jana Ahlfinger Bell. (10)
10.13 - Stock Option Agreement, dated September 18, 1998, by and between the Company and
Jana Ahlfinger Bell. (10)
10.14 - September 18, 1998 Amended and Restated Stock Option Agreement of April 25,
1997, by and between the Company and Robert LaMere. (10)
10.15 - September 18, 1998 Amended and Restated Stock Option Agreement of June 3, 1998,
by and between the Company and Todd A. Felker. (10)
10.16 - Stock Option Agreement dated November 24, 1998, by and between the Company and
Michael Smith. (10)
EXHIBIT
NUMBER TITLE
------ -----
10.17 - Agreement No. 980427 between Southwestern Bell Telephone Company, Pacific Bell,
Nevada Bell, Southern New England Telephone and HighwayMaster Corporation
executed on January 13, 1999. (11)(12)
10.18 - Administrative Carrier Agreement entered into between HighwayMaster Corporation
and Southwestern Bell Mobile Systems, Inc. on March 30, 1999. (11)(12)
10.19 - Addendum to Agreement entered into between HighwayMaster Corporation and
International Telecommunications Data Systems, Inc. on February 4, 1999. (11)(12)
10.20 - Second Addendum to Agreement entered into between HighwayMaster Corporation and
International Telecommunications Data Systems, Inc. on February 4, 1999.
(11)(12)
10.21 - Stock Option Agreement dated June 24, 1999, by and between the Company and J.
Raymond Bilbao. (13)
10.22 - Stock Option Agreement dated June 24, 1999, by and between the Company and
Marshall Lamm. (13)
10.23 - Fleet-on-Track Services Agreement entered into between GTE Telecommunications
Services Incorporated and HighwayMaster Corporation on May 3, 1999. (13)(14)
10.24 - Stock Option Agreement dated September 3, 1999, by and between the Company and
J. Raymond Bilbao. (15)
10.25 - Stock Option Agreement dated September 3, 1999, by and between the Company and
Todd Felker. (15)
10.26 - Stock Option Agreement dated September 3, 1999, by and between the Company and
C. Marshall Lamm. (15)
10.27 - Stock Option Agreement dated September 3, 1999, by and between the Company and
W. Michael Smith. (15)
10.28 - Stock Option Agreement dated September 3, 1999, by and between the Company and
Robert W. LaMere. (15)
10.29 - Limited Liability Company Agreement of HighwayMaster of Canada, LLC executed
March 3, 2000. (16)
10.30 - Monitoring Services Agreement dated May 25, 2000, by and between the Company and
Criticom International Corporation. (17) (18)
10.31 - Commercial Lease Agreement dated April 26, 2000 by and between the Company and
10th Street Business Park, Ltd. (18)
10.32 - Stock Option Agreement dated July 18, 2001, by and between the Company and Jana
A. Bell (19)
10.33 - Stock Option Agreement dated June 21, 2001, by and between the Company and Jana
A. Bell (19)
10.34 - Stock Option Agreement dated July 18, 2001, by and between the Company and J.
Raymond Bilbao (19)
10.35 - Stock Option Agreement dated June 21, 2001, by and between the Company and J.
Raymond Bilbao (19)
10.36 - Stock Option Agreement dated July 18, 2001, by and between the Company and Todd
A. Felker (19)
10.37 - Stock Option Agreement dated June 21, 2001, by and between the Company and Todd
A. Felker (19)
10.38 - Stock Option Agreement dated July 18, 2001, by and between the Company and
Robert W. LaMere (19)
10.39 - Stock Option Agreement dated June 21, 2001, by and between the Company and
Robert W. LaMere (19)
10.40 - Stock Option Agreement dated July 18, 2001, by and between the Company and
Marshall Lamm (19)
10.41 - Stock Option Agreement dated June 21, 2001, by and between the Company and
Marshall Lamm (19)
10.42 - Stock Option Agreement dated July 18, 2001, by and between the Company and W.
Michael Smith (19)
EXHIBIT
NUMBER TITLE
------ -----
10.43 - Stock Option Agreement dated June 21, 2001, by and between the Company and W.
Michael Smith (19)
10.44 - Employment Agreement, dated June 21, 2001, between Jana A. Bell and the Company
(20)
10.45 - Employment Agreement, dated June 21, 2001, between J. Raymond Bilbao and the
Company (20)
10.46 - Employment Agreement, dated June 21, 2001, between W. Michael Smith and the
Company (20)
10.47 - Employment Agreement, dated June 21, 2001, between Todd A. Felker and the
Company (20)
10.48 - Agreement No. 980427-03, dated January 31, 2002 between SBC Ameritech, SBC
Pacific Bell, SBC Southern New England Telephone, SBC Southwestern Bell
Telephone, L.P. and the Company (27) (28)
11.0 - Statement Regarding Computation of Per Share Earnings (29)
99.0 - Receipt of representation from Arthur Andersen, LLP (26)
99.1 - Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, by Jana Ahlfinger Bell, President
and Chief Executive Officer (29)
99.2 - Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, by W. Michael Smith, Executive
Vice President and Chief Financial Officer (29)
- ----------
(1) Filed in connection with the Company's Registration Statement on Form
S-1, as amended (No. 33-91486), effective June 22, 1995.
(2) Filed in connection with the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995.
(3) Certain confidential portions deleted pursuant to Application for
Confidential Treatment filed in connection with the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995.
(4) Indicates management or compensatory plan or arrangement required to be
identified pursuant to Item 14(a)(4).
(5) Filed in connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended June 30, 1996.
(6) Filed in connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended March 31, 1997.
(7) Certain confidential portions deleted pursuant to Order Granting
Application for Confidential Treatment issued in connection with the
Company's Form 10-Q Quarterly Report for the quarterly period ended March
31, 1997.
(8) Filed in connection with the Company's Registration Statement on Form
S-4, as amended (No. 333-38361).
(9) Filed in connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended September 30, 1998.
(10) Filed in connection with the Company's Form 10-K fiscal year ended
December 31, 1998.
(11) Filed in connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended March 31, 1999.
(12) Certain confidential portions deleted pursuant to Order Granting
Application for Confidential Treatment issued June 22, 1999 in connection
with the Company's Form 10-Q Quarterly Report for the quarterly period
ended March 31, 1999.
(13) Filed in connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended June 30, 1999.
(14) Certain confidential portions deleted pursuant to letter granting
application for confidential treatment issued October 10, 1999 in
connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended June 30, 1999.
(15) Filed in connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended September 30, 1999.
(16) Filed in connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended March 31, 2000.
(17) Certain confidential portions deleted pursuant to Order Granting
Application for Confidential Treatment issued December 5, 2000 in
connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended June 30, 2000.
(18) Filed in connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended June 30, 2000.
(19) Filed in connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended September 30, 2001.
(20) Filed in connection with the Company's Current Report on Form 8-K filed
with the SEC on June 29, 2001.
(21) Filed as Appendix A to the Company's Definitive Proxy Statement on
Schedule 14A filed with the SEC on May 11, 2001.
(22) Filed in connection with the Company's Current Report on Form 8-K filed
with the SEC on March 27, 2002. Certain confidential portions deleted
pursuant to Order Granting Application for Confidential Treatment issued
in connection with the Company's Current Report on Form 8-K filed with
the SEC on March 27, 2002.
(23) Filed in connection with the Company's Form S-3 Registration Statement
filed with the SEC on October 10, 2001 (File No. 333-71340).
(24) Incorporated by reference to Exhibit A to the proxy statement contained
in the Company's Definitive Schedule 14A with the SEC on April 25, 2000.
(25) Incorporated by reference to Exhibit F to the proxy statement contained
in the Company's Definitive Schedule 14A filed with the SEC on May 11,
2001.
(26) Filed in connection with the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001.
(27) Filed in connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ending March 31, 2002.
(28) Certain confidential portions deleted pursuant to Order Granting
Application for Confidential Treatment issued in connection with the
Company's Quarterly Report on Form 10-Q for the quarterly period ending
March 31, 2002.
(29) Filed herewith.