SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 27, 1999
MDSI MOBILE DATA SOLUTIONS INC.
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(Exact name of registrant as specified in its charter)
Canada
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(State or other jurisdiction of incorporation)
0-28968 Not applicable
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(Commission File Number) (IRS Employer Identification No.)
12071 Shellbridge Way
Richmond, British Columbia, Canada V6X 2W8
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (604) 207-6000
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(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 6 Pages
Exhibit Index is on Page 4
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Item 5. Other Events.
On April 27, 1999, the Company filed a Material Change Report with the
Provincial Securities Commissions in Canada announcing that on April 27, 1999
the Company had chosen to sell its transportation business unit.
(c) Exhibits.
20.1 Form 27 -- Material Change Report dated April 27, 1999
<PAGE>
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 hereunto duly authorized.
MDSI MOBILE DATA SOLUTIONS INC..
May 10, 1999 By /s/ Verne D. Pecho
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Date Verne D. Pecho,
Vice-President, Finance and
Administration.
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Exhibit Sequentially
Number Exhibit Numbered Page
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20.1 Form 27 -- Material Change Report dated 5
April 27, 1999
Exhibit 20.1
FORM 27
MATERIAL CHANGE FORM
Item 1. Name and Address of Reporting Issuer
MDSI Mobile Data Solutions, Inc. (the "Company")
10271 Shellbridge Way
Richmond, B.C.
V6X 2W8
Item 2. Date of Material Change
The effective date of the material change herein reported is
April 27, 1999.
Item 3. Date and Place of Issuance of Press Release
The press release was issued on April 27, 1999 at Richmond,
British Columbia.
Item 4. Summary of Material Change
The Company announced on April 27, 1999 that it has chosen to
sell its transportation business unit.
Item 5. Full Description of Material Change
The Company has announced that going forward it will be
focusing exclusively on the field service markets, namely
telecommunications/cable, utility, maintenance and repair
organizations, state and local government, and insurance. As a
result of this strategy, the Company has decided to sell its
transportation business unit, which oversees the delivery
markets including taxi, courier, and roadside recovery. The
Company is negotiating with potential purchasers who focus on
these vertical markets.
In announcing this decision, Ken Miller, the Company's Chief
Executive Officer, noted that "Our strategy has always been to
operate in those markets where we can be the leader, both in
the solutions we offer and in our performance. Our success
with this strategy in the field service markets is reflected
in the quality, depth and increasingly international flavour
of our customer list. MDSI generated a full 81% of 1998
revenues from field service markets, and 100% of our profits.
Looking forward, we see the opportunity in these markets only
growing larger as global deregulation of the
telecommunications, cable and utility industries continues to
unfold. To make the most of the opportunity, we must focus all
of our resources, time and attention on these markets."
<PAGE>
-2-
The Company's results from operations for the first quarter of
1999 and the comparative quarter of 1998 no longer include
results of operations from the transportation business unit.
In connection with the Company's decision to exit the taxi,
courier, and roadside recovery markets, the Company has taken
a CAD$11.3 million one-time charge to income this quarter, in
accordance with Canadian generally accepted accounting
principles. The one-time charge in accordance with US
generally accepted accounting principles is $5.9 million.
Item 6. Reliance on Section 75(3) of the Act
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N/A
Item 7. Omitted Information
N/A
Item 8. Name & Business Telephone Number
of Senior Officer to Contact
M. Greg Beniston, Vice-President, Legal and Corporate
Secretary (business telephone number 604-207-6293), is the
officer of the Company knowledgeable about the details of this
material change report.
Item 9. Statement of Senior Officer
The Undersigned, being a senior officer of the reporting
issuer, hereby attests that the foregoing accurately discloses
the material change referred to herein.
DATED at Richmond, B.C., the 6th day of May, 1999.
/s/ M. Greg Beninston
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(signature)
M. GREG BENISTON
Vice-President, Legal and
Corporate Secretary
<PAGE>
[MDSI LOGO]
FOR IMMEDIATE RELEASE
NEWS RELEASE
MDSI Reports First Quarter Results
Company to focus exclusively on burgeoning field service markets
Richmond, BC, April 27, 1999 - MDSI Mobile Data Solutions Inc. ("MDSI" or "the
Company") of Richmond, British Columbia (Nasdaq: MDSI; TSE, ME: MMD) announced
today its first quarter results for the period ended March 31, 1999. Financial
highlights include diluted EPS of $0.12 (all figures pertain to continuing
operations - see below), a 92% increase in total revenues and a 69% increase in
software and services revenue, over first quarter 1998. Other highlights include
an announcement that going forward the Company is focusing exclusively on its
burgeoning field service markets: telecommunications/cable, utility, maintenance
and repair organizations, state and local government, and insurance. As a result
of this strategy, the Company has chosen to sell its transportation business
unit, which oversees the delivery markets: taxi, courier and roadside recovery.
MDSITM is negotiating with potential purchasers who focus on these vertical
markets and expects to make an announcement within the next month.
Ken Miller, MDSI's CEO, commented on the Company's field service focus and first
quarter results, "Our strategy has always been to operate in those markets where
we can be the leader, both in the solutions we offer and in our performance. Our
success with this strategy in the field service markets is reflected in the
quality, depth and increasingly international flavour of our customer list. MDSI
generated a full 81% of 1998 revenues from field service markets, and 100% of
our profits. Looking forward, we see the opportunity in these markets only
growing larger as global deregulation of the telecommunications, cable and
utility industries continues to unfold. To make the most of the opportunity, we
must focus all of our resources, time and attention on these markets." Added
Miller, "We are very pleased with our results this quarter. Our results for our
field service operations were right where we expected them to be, indicating
that we executed well on the projects in backlog, and our revenues grew
significantly, as we expected. Because of seasonality in our business, first
quarter is typically our slowest, but these strong results give us a great deal
of confidence for the remainder of the year." Miller concluded, "This has been
one of the busiest and, from a strategic point of view, most productive quarters
in MDSI's history; I am very pleased to say that the company has emerged from it
more focused and stronger than ever."
MDSI's results from operations for the current quarter and the comparative
quarter of 1998 no longer include results of operations from the transportation
business unit, reflecting this increased focus on field service markets. Unless
otherwise indicated, all figures in this news release refer to operations
exclusive of the transportation business unit. MDSI's financial results are
stated in Canadian dollars and prepared in accordance with generally accepted
accounting principles (GAAP) in the United States. For ease of comparison, MDSI
has also restated its statements of operations for the previous eight quarters;
they can be viewed from the "NewsFlash" link on the Home page of the Company's
web site at www.mdsi-advantex.com.
For the quarter ended March 31, 1999, MDSI reported revenues of $18.8 million,
up 92% from $9.8 million in the first quarter of 1998. Software and services
revenue rose to $13.2 million, a 69% increase over $7.8 million recorded in the
comparable period last year. To continue the enhancement of its AdvantexTM
product suite and to fuel future growth, the Company continued to dedicate
significant resources to its research and development, and sales and marketing
efforts. Research and development expense increased 48% over the first quarter
of 1998 to $2.4 million, while sales and marketing expense increased 43% to $3.9
million over the same period.
Net income and earnings per share for the first quarter of 1999 were $0.9
million and $0.12 per share (US$0.08), respectively. This compares to a net loss
of $0.1 million, or $(0.01) per share (US$(0.01)), for the first quarter of
1998. In connection with MDSI's decision to exit the taxi, courier and roadside
recovery markets, the Company has taken a $5.9 million one-time charge to income
this quarter. EPS after the charge is $(0.70).
Total backlog at March 31, 1999 was $63.8 million, up 11% over $57.7 million at
December 31, 1998 and up 136% over $27.0 million at March 31, 1998. Software and
services backlog rose to $49.6 million at March 31, 1999, a 2% gain over $48.5
million at December 31, 1998 and a 179% increase compared to $17.8 million at
March 31, 1998.
-more-
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The results are included in the attached schedules and summarized in the table
below. All amounts are in millions, except per share amounts. Per share amounts
are calculated on a diluted basis.
<TABLE>
C$ millions, except per share amounts. Three months ended Three months ended
All amounts exclude the transportation business unit. March 31, 1999 March 31, 1998
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<S> <C> <C>
Total Revenues 18.8 9.8
Software & Services Revenue 13.2 7.8
Net Income (loss) 0.9 (0.1)
Earnings (loss) per Share 0.12 (0.01)
Backlog 63.8 27.0
A number of other significant developments have occurred since MDSI's last
quarterly announcement:
o MDSI concluded its 4th Annual User Group Meetings and Business
Solutions Conference. For four days, over 400 delegates and 23
partners from around the world attended the conference, the largest in
MDSI's industry.
o The Company announced a C$13 million contract with Telenor, Norway's
market leader in telecommunications, data services and media
distribution, a C$18 million contract with Belgacom SA, Belgium's
national telecommunications provider, and a contract with Meralco of
the Philippines, generator of over one-half of the country's total
energy.
o MDSI announced a worldwide Cooperative Marketing Agreement with Lucent
Technologies' subsidiary, Kenan Systems, a leading provider of
billing, customer care, order management and decision support
software.
o MDSI changed its Nasdaq symbol effective April 1 to "MDSI".
o Rob Cruickshank joined MDSI as President and Chief Operating Officer.
Rob brings with him almost thirty years of telecommunications industry
experience, including several years at the highest management levels.
MDSI is a global leader in the development and implementation of workforce
management and wireless connectivity solutions for companies with mobile
resources. MDSI serves companies in the utility and telecommunications/cable
markets, and other strategic field service markets where mobile resources are
key to the delivery of customer service, such as maintenance and repair
organizations, state and local government, and insurance. The Company was
founded in 1993, and has operations in the U.S., Canada, Europe, and Asia. With
approximately 100 customers in over 25 countries worldwide, MDSI is the choice
of industry leaders such as: AT&T Wireless Services, Belgacom SA, Boston Edison
Company, Cablevision Systems Corporation, Cox Communications, Illinois Power
Company, North Carolina State Highway Patrol, Pacific Gas & Electric, San Diego
Gas & Electric, Tele Danmark and Telenor.
MDSI and Advantex are trademarks of MDSI Mobile Data Solutions Inc. All rights
reserved. All other trademarks are the property of their respective owners.
####
This press release contains statements that constitute "forward looking
statements" within the meaning of Section 27A of the Securities Exchange Act of
1934. Such statements involve risks and uncertainties that may cause actual
results to differ materially from anticipated results. Such risks and
uncertainties include, but are not limited to, risks associated with the sale of
the Company's transportation business unit and the charge to income associated
therewith, the Company's limited operating history, lengthy sales cycles, the
Company's dependence upon large contracts and relative concentration of
customers, dependence on selected vertical markets, economic conditions and
other risks and uncertainties detailed in the Company's filings with the
Securities and Exchange Commission.
For further information contact:
Rick Wadsworth
Investor Relations
MDSI Mobile Data Solutions Inc.
Ph: (604) 207-6000 ext. 6300
Fax: (604) 207-6060
[email protected]
www.mdsi-advantex.com
<PAGE>
MDSI MOBILE DATA SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in Canadian dollars)
(Unaudited)
Three months ended
March 31,
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1999 1998
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<S> <C> <C>
REVENUE
Software and services $ 13,221,367 $ 7,823,224
Third party products and services 4,086,021 867,846
Maintenance and support 1,524,179 1,132,811
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18,831,567 9,823,881
DIRECT COSTS 8,798,732 4,502,603
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GROSS PROFIT 10,032,835 5,321,278
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OPERATING EXPENSES
Research and development 2,439,547 1,653,078
Sales and marketing 3,879,986 2,720,129
General and administrative 2,036,620 1,122,727
Amortization of intangible assets 94,383 94,383
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8,450,536 5,590,317
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OPERATING INCOME (LOSS) 1,582,299 (269,039)
OTHER INCOME (EXPENSE) (245,428) 177,441
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INCOME (LOSS) BEFORE TAX PROVISION 1,336,871 (91,598)
PROVISION FOR INCOME TAXES (429,376) (1,341)
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NET INCOME (LOSS) FROM CONTINUING OPERATIONS 907,495 (92,939)
(LOSS) PROFIT FROM DISCONTINUED OPERATIONS (5,852,786) 169,201
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NET INCOME (LOSS) $ (4,945,291) $ 76,262
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NET INCOME (LOSS) : CANADIAN GAAP
NET INCOME (LOSS) FROM CONTINUING OPERATIONS: US GAAP $ 907,495 $ (92,939)
Amortization of intangible assets (250,075) (250,075)
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NET INCOME (LOSS) FROM CONTINUING OPERATIONS:CANADIAN GAAP $ 657,420 $ (343,014)
Loss from Discontinued Operations (11,332,086) (47,181)
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NET LOSS $(10,674,666) $ (390,195)
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EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS:
US GAAP (Diluted) $ 0.12 $ (0.01)
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CANADIAN GAAP (Basic) $ 0.09 $ (0.05)
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NET EARNINGS (LOSS) PER COMMON SHARE:
US GAAP (Diluted) $ (0.70) $ 0.01
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CANADIAN GAAP (Basic) $ (1.52) $ (0.06)
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WEIGHTED AVERAGE SHARES OUTSTANDING:
US GAAP (Diluted) 7,628,799 6,621,553
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CANADIAN GAAP (Basic) 7,021,007 6,466,336
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</TABLE>
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MDSI MOBILE DATA SOLUTIONS INC.
CONSOLIDATED BALANCE SHEETS
(Expressed in Canadian dollars)
<TABLE>
As at
---------------------------------------
March 31, December 31,
1999 1998
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(Unaudited) (Restated)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 23,260,398 $ 6,136,711
Accounts receivable, net
Trade 16,602,414 16,603,944
Unbilled 8,106,288 7,789,586
Prepaid expenses 2,973,160 3,458,348
Current portion of lease receivable 560,583 560,478
Deferred income taxes 914,474 1,016,766
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52,417,317 35,565,833
LEASE RECEIVABLE 642,424 845,889
CAPITAL ASSETS, NET 5,734,395 5,137,296
INTANGIBLE ASSETS, NET 3,035,952 3,130,334
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61,830,088 44,679,352
ASSETS OF DISCONTINUED OPERATIONS 6,935,990 11,889,004
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TOTAL ASSETS $ 68,766,078 $ 56,568,356
=================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,947,957 $ 7,140,470
Accrued liabilities 4,298,867 3,320,436
Income taxes payable 1,448,291 2,442,571
Deferred revenue 8,517,582 7,317,895
Current portion of long-term debt 72,800 377,332
Current obligations under capital leases 1,244,797 872,917
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19,530,294 21,471,621
OBLIGATIONS UNDER CAPITAL LEASES 2,526,105 1,907,037
LIABILITIES OF DISCONTINUED OPERATIONS 4,627,341 2,370,579
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TOTAL LIABILITIES 26,683,740 25,749,237
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STOCKHOLDERS' EQUITY
Common stock 60,846,289 44,637,778
Treasury stock (122,743) (122,743)
Retained earnings (deficit) (18,641,208) (13,695,916)
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42,082,338 30,819,119
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 68,766,078 $ 56,568,356
=================== ==================
</TABLE>
