<PAGE>
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 March 31, 1996
--------------
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
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HIGHWAYMASTER COMMUNICATIONS, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 51-0352879
------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
16479 DALLAS PARKWAY, SUITE 710, DALLAS, TEXAS 75248
---------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 732-2500
--------------
NOT APPLICABLE
----------------------------------------------------
(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 May 10, 1996
---------------------------- ----------------------------------
Common Stock, $.01 par value 22,022,424
<PAGE>
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
Form 10-Q
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1 Consolidated Financial Statements:
Consolidated Balance Sheets at March 31, 1996
and December 31, 1995 1
Consolidated Statements of Operations for the
three months ended March 31, 1996 and 1995 2
Consolidated Statements of Cash Flows for the three
months ended March 31, 1996 and 1995 3
Consolidated Statement of Changes in Stockholders'
Equity for the three months ended March 31, 1996 4
Notes to Consolidated Financial Statements 5-6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
PART II. OTHER INFORMATION
Item 1 Legal Proceedings 9
Item 2 Changes in Securities 9
Item 3 Defaults Upon Senior Securities 9
Item 4 Submission of Matters to a Vote of Security Holders 9
Item 5 Other Information 9
Item 6 Exhibits and Reports on Form 8-K 9
Signatures 10
<PAGE>
PART I - FINANCIAL INFORMATION
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
ASSETS
MARCH 31, DECEMBER 31,
1996 1995
------------ ------------
Current assets:
Cash and cash equivalents $11,393 $23,969
Accounts receivable, net 6,311 5,949
Other short-term receivables 868 803
Inventory 9,637 4,199
Prepaid expenses 409 506
------- -------
Total current assets 28,618 35,426
Property, plant and equipment, net 5,415 3,927
Long-term receivables 1,441 1,394
Deposits 262 112
Other assets 1,243 1,510
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$36,979 $42,369
------- -------
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,856 $ 5,028
Telecommunications costs payable 1,531 1,984
Accrued interest payable to related parties 342 345
Accrued warranty 773 876
Other current liabilities 846 1,421
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Total current liabilities 10,348 9,654
Notes payable to related parties 11,772 11,488
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Total liabilities 22,120 21,142
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Series B redeemable preferred stock 8,736 8,126
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Stockholders' equity:
Common stock 223 223
Additional paid-in capital 90,560 90,560
Accumulated deficit (84,113) (77,135)
Treasury stock (547) (547)
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6,123 13,101
------- -------
Total stockholders' equity $36,979 $42,369
------- -------
------- -------
See accompanying notes to consolidated financial statements.
1
<PAGE>
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share)
THREE MONTHS ENDED
MARCH 31,
-------------------
1996 1995
------- -------
Revenues:
Product $ 2,771 $ 3,881
Service 3,520 1,800
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Total revenues 6,291 5,681
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Cost of revenues:
Product 2,730 4,081
Service 2,558 1,838
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Total cost of revenues 5,288 5,919
Gross profit (loss) 1,003 (238)
General and administrative expenses 2,129 1,640
Sales and marketing expenses 2,284 1,533
Engineering expenses 841 663
Customer service expenses 1,885 1,358
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Operating loss (6,136) (5,432)
Interest income 306 12
Interest expense to related parties (538) (1,799)
Other (expense) - (24)
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Loss before income taxes (6,368) (7,243)
Income tax provision - -
------- -------
Net loss $(6,368) $(7,243)
------- -------
------- -------
Per share data:
Net loss per share $ (0.32) $ (0.41)
------- -------
------- -------
Weighted average number of shares outstanding 22,022 18,711
------- -------
------- -------
See accompanying notes to consolidated financial statements.
2
<PAGE>
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
THREE MONTHS ENDED
MARCH 31,
------------------
1996 1995
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(6,368) $(7,243)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation and amortization 318 282
Amortization of discount on notes payable 284 875
(Increase) decrease in accounts receivable (362) 180
(Increase) decrease in other receivables (112) (269)
(Increase) decrease in inventory (5,438) (703)
(Increase) decrease in prepaid expenses
and deposits (53) (14)
Increase (decrease) in accounts payable 1,828 1,808
Increase (decrease) in accrued expenses and
other current liabilities (1,134) 1,953
Other 136 (167)
-------- -------
Net cash used in operating actitivies (10,901) (3,298)
-------- -------
CASH FLOWS FROM INVESTING ACTITIVIES:
Capital expenditures (695) (85)
Software development costs (27) (115)
Construction in progress (953) -
-------- -------
Net cash used in investing activities (1,675) (200)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash provided by financing activities - -
-------- -------
Net decrease in cash (12,576) (3,498)
Cash and cash equivalents, beginning of period 23,969 4,158
-------- -------
Cash and cash equivalents, end of period $ 11,393 $ 660
-------- -------
-------- -------
Supplemental cash flow information:
Interest paid $255 $777
-------- -------
-------- -------
See accompanying notes to consolidated financial statements.
3
<PAGE>
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Three months ended March 31, 1996
(UNAUDITED)
(in thousands, except share information)
<TABLE>
COMMON STOCK ADDITIONAL TREASURY STOCK
------------------- PAID-IN ---------------- ACCUMULATED
SHARES AMOUNT CAPITAL SHARES AMOUNT DEFICIT TOTAL
---------- ------ ---------- ------- ------ ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Stockholders' equity at December 31, 1995 22,333,661 $223 $90,560 311,997 $(547) $(77,135) $13,101
Accretion of discount -- Series B preferred stock (610) (610)
Net loss (6,368) (6,368)
---------- ---- ------- ------- ----- -------- -------
Stockholders' equity at March 31, 1996 22,333,661 $223 $90,560 311,997 $(547) $(84,113) $ 6,123
---------- ---- ------- ------- ----- -------- -------
---------- ---- ------- ------- ----- -------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
Notes To Consolidated Financial Statements
(Unaudited)
1. BUSINESS OVERVIEW
The Company operates a wireless enhanced-services network with both
voice and data capabilities in 99% of the available cellular coverage areas
in the United States and 100% of the A-Side cellular coverage areas in
Canada. The Company's private network covers approximately 95% of the United
States interstate highway system. Through this private network, the Company
provides integrated mobile voice, data, tracking, and fleet management
information services to trucking companies and private truck operators in the
long-haul segment of the transportation industry.
The HighwayMaster system includes a Mobile Communication Unit (the
"Mobile Communication Unit" or "Unit") installed in each truck and a
proprietary dispatch software package developed by the Company for use by
trucking companies. The Mobile Communication Unit transmits and receives
voice and data communication to and from long-haul trucks through the
Company's private network. In addition, the Unit contains a sophisticated
navigational tracking device that enables dispatchers to obtain accurate
position reports for trucks located anywhere in the United States and Canada.
The Company's dispatch software package enables a trucking company to
optimize the use of its fleet by processing data transmitted by Mobile
Communication Units and performing a variety of fleet management functions.
The Company's revenues are derived from sales and installation of Mobile
Communication Units and charges for its services.
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 generally accepted accounting principles. These consolidated
financial statements should be read in conjunction with the Company's audited
consolidated financial statements for the year ended December 31, 1995. 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.
Operating expenses for 1995 have been reclassified to conform to the
1996 presentation.
3. INVENTORIES
MARCH 31, DECEMBER 31,
1996 1995
----------- ------------
Complete systems $ 6,052,000 $2,153,000
Component parts 4,075,000 2,476,000
----------- ----------
10,127,000 4,629,000
Less inventory reserve (490,000) (430,000)
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$ 9,637,000 $4,199,000
----------- ----------
----------- ----------
5
<PAGE>
4. EARNINGS PER SHARE
Net loss per share for the three months ended March 31, 1995 and 1996
was computed by dividing the net loss, increased by the accretion of discount
on Series B Preferred Stock of $494,000 and $610,000, respectively, by the
weighted average number of shares outstanding during the periods.
Stock options granted with exercise prices below the $19.75 offering
price in the Company's June 1995 initial public offering (the "Offering") and
shares of common stock issued during the twelve-month period preceding the
initial filing date of the registration statement for the Offering have been
included in the calculation of weighted average shares outstanding for the
three months ended March 31, 1995. The stock options were included in the
calculation of common stock equivalents using the treasury stock method. For
the three months ended March 31, 1996, there were no common stock equivalents.
5. LITIGATION
On February 16, 1996, the Company filed a lawsuit against AT&T Corp. in
the U.S. District Court, Northern District of Texas, Dallas Division. The
Company is seeking preliminary and permanent injunctive relief restraining
AT&T from using and disclosing the Company's trade secrets and proprietary
information relating to its mobile communications technology. The suit also
requests actual and punitive damages, including attorneys' fees, stemming
from AT&T's intentional and tortious conduct in violation of certain
non-disclosure and other confidentiality agreements signed by AT&T regarding
the Company's trade secrets.
On December 14, 1995 and on February 23, 1996, lawsuits were filed
against the Company and its directors, along with the lead underwriters for
the Company's Offering, by William M. Crawford, Trustee of the Crawford
Family Trust, in the United States District Court, Northern District of Texas
and by Steven M. Fradin, Southern District of New York, respectively. The
plaintiff in each suit seeks securities class-action certification and
purports to represent all similarly situated shareholders, who bought stock
in the Company pursuant to its Offering in June 1995 or immediately
thereafter. The plaintiffs, seeking unspecified damages, allege that the
Company's registration statement, prospectus and other communications in its
Offering contained false and materially misleading statements. HighwayMaster
believes that the plaintiffs' claims are without merit and the Company
intends to vigorously defend the lawsuits.
6
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31,
1995
Revenues for the three months ended March 31, 1996 were $6.3 million
compared to $5.7 million for the three months ended March 31, 1995. Product
revenues for the three months ended March 31, 1996 were $2.8 million compared
to $3.9 million for the three months ended March 31, 1995. Service revenues
for the three months ended March 31, 1996 were $3.5 million compared to $1.8
million for the three months ended March 31, 1995. The decrease in product
revenues from the 1995 period to the 1996 period is primarily attributable to
a 36.3% decrease in Units sold offset in part by a higher average sales price
per Unit in the 1996 period. The decrease in Units sold in the 1996 period as
compared to the 1995 period is due to, among other things, start-up
inefficiencies in connection with the restructuring of the Company's sales
force which began in the fourth quarter of 1995 and continued into the first
quarter of 1996, and adverse economic conditions affecting the trucking
industry. The increase in service revenues from the 1995 period to the 1996
period is primarily attributable to the increase in the number of Mobile
Communication Units in service.
Cost of revenues for the three months ended March 31, 1996 was $5.3
million compared to $5.9 million for the three months ended March 31, 1995.
This relationship reflects the decrease in Units sold in the 1996 period
compared to the 1995 period offset in part by increased cost of service
revenues in the 1996 period as a result of the increase in the number of
Mobile Communication Units in service. Cost of revenues for the 1996 period
was 84.1% of revenues compared to 104.2% of revenues for the 1995 period.
Cost of product revenues for the 1996 period was 98.5% of product revenues
compared to 105.2% of product revenues in the 1995 period. The improvement
from a negative margin in the 1995 period to a positive margin in the 1996
period is primarily due to higher average selling prices and lower average
cost per Unit in the 1996 period as compared to the 1995 period. However,
both periods reflect higher costs associated with a product installation
infrastructure with excess capacity to support anticipated increases in
sales. Cost of service revenues for the 1996 period was 72.7% of service
revenues compared to 102.1% of service revenues in the 1995 period. The
improvement from the 1995 period to the 1996 period is primarily due to (i)
the effect of lower costs as a result of renegotiated rates with the
Company's service providers that were in effect during the 1996 period and
(ii) improvement in the Company's ability to monitor and control charges for
airtime usage.
General and administrative expenses for the three months ended March 31,
1996 were $2.1 million compared to $1.6 million for the three months ended
March 31, 1995. From the 1995 period to the 1996 period, the Company's
general and administrative functions were increased to meet the growth in
revenues as well as for the additional administrative requirements of a
public company. Accordingly, virtually all categories of expenses increased.
The most significant increases were payroll related costs, occupancy costs,
insurance and legal fees. These increases were partially offset by decreases
in bad debt expense and amortization expense.
Sales and marketing expenses for the three months ended March 31, 1996
were $2.3 million compared to $1.5 million for the three months ended March
31, 1995. The increase from the 1995 period to the 1996 period is primarily
related to growth in the number of employees.
Engineering expenses for the three months ended March 31, 1996 were $0.8
million compared to $0.7 million for the three months ended March 31, 1995.
This increase is primarily attributable to increases in payroll and research
and development expenditures.
Customer service expenses for the three months ended March 31, 1996 were
$1.9 million compared to $1.4 million for the three months ended March 31,
1995. This increase is primarily attributable to (i) payroll related costs as
a result of growth in the number of employees and (ii) related travel and
telephone costs in response to the increased number of Units in service.
7
<PAGE>
The changes in interest income and interest expense to related parties
between the 1996 and 1995 periods reflects the income from temporary
investments made with a portion of the proceeds from the Initial Public
Offering and lower average outstanding indebtedness in the 1996 period as a
result of the debt repayments made with a portion of the proceeds from the
Initial Public Offering.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $18.3 million at March 31, 1996
compared to $25.8 million at December 31, 1995. The Company's cash and cash
equivalents balance at March 31, 1996 was $11.4 million compared to $24.0
million at December 31, 1995.
Net cash consumed during the three months ended March 31, 1996 was $12.6
million due primarily to a $6.4 million loss from operations, an inventory
build-up of $5.4 million and capital expenditures of $1.7 million.
The Company's business historically has not required substantial capital
expenditures. However, the Company has expended approximately $2.4 million
through March 31, 1996 and is committed to expend an additional $2.2 million
for the development and construction of the Company Complex to serve as an
alternative to the AT&T Complex and to provide system architecture that could
be modified to serve local or regional dispatchers of service vehicle or
transportation fleets. In the event the Company elects to expand its local
service business or to pursue other business opportunities, the Company will
need to build additional complexes, using the Company Complex as a prototype.
Based on the Company's most recent projection of operating results for
1996, the Company believes that it will likely be necessary to obtain
additional capital resources during the second half of 1996 to fund its
currently anticipated operating needs, capital expenditures and debt service
requirements. The need for this financing is due to, among other things, the
recent higher than projected inventory build-up as a result of actual sales
levels being less than projected sales levels. In order to conserve cash, the
Company has significantly reduced its production of Mobile Communication
Units and renegotiated payment terms with certain of its vendors. At the
present time, the Company does not have binding commitments in place for
additional short-term or long-term financing. However, the Company is
currently in negotiation with certain financing sources. While there can be
no assurance that the Company will be able to consummate a financing
arrangement on terms that would be satisfactory to the Company, the Company
believes that it will be able to obtain financing from these sources in an
amount sufficient to satisfy its anticipated cash needs through the end of
1996. The Company is closely monitoring its cash requirements and sources of
short-term financing. However, the Company's future cash flow from operations
and operating requirements may vary depending on a number of factors,
including the rate of installation of Mobile Communication Units, the
transition from the AT&T Complex to the Company Complex, the level of
competition and general economic conditions and other factors beyond the
Company's control. Accordingly, there can be no assurance that the projected
operating results will be achieved and that anticipated capital resources
will be sufficient for continued operations.
INFLATION
The Company believes that to date inflation has not had a material
effect on its results of operations. Although inflation may in the future
affect the cost of the Mobile Communication Units sold by the Company, the
Company expects that economies of scale and engineering improvements are
likely to offset any foreseeable cost increases.
8
<PAGE>
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
PART II - OTHER INFORMATION
Item 1. Legal Proceedings --
On February 16, 1996, the Company filed a lawsuit against AT&T Corp.
in the U.S. District Court, Northern District of Texas, Dallas
Division. The Company is seeking preliminary and permanent injunctive
relief restraining AT&T from using and disclosing the Company's trade
secrets and proprietary information relating to its mobile
communications technology. The suit also requests actual and punitive
damages, including attorneys' fees. The Company and AT&T are parties
to a contract (the "AT&T Contract") under which AT&T provides
enhanced call processing, data management services and
long-distance network transport services through a switching
complex owned and operated by AT&T. In
reliance upon AT&T's assurance of both confidentiality and
exclusivity, supported by separate non-disclosure agreements, the
Company provided certain trade secrets to AT&T to enable it to
construct and operate the AT&T Complex. In its complaint, the
Company alleged that AT&T threatened to terminate the AT&T Contract
and make available to one or more competitiors of the Company
services based on the Company's proprietary technology and trade
secrets. On March 12, 1996, AT&T provided the Company with formal
notice of its termination of the AT&T Contract effective as of June
29, 1996.
On December 14, 1995 and on February 23, 1996, lawsuits were filed
against the Company and its directors, along with the lead underwriters
for the Company's Offering, by William M. Crawford, Trustee of the
Crawford Family Trust, in the United States District Court, Northern
District of Texas and by Steven M. Fradin, Southern District of New
York, respectively. The Plaintiff in each suit seeks securities
class-action certification and purports to represent all similarly
situated shareholders, who bought stock in the Company pursuant to its
Offering in June 1995 or immediately thereafter. The plaintiffs, seeking
unspecified damages, allege that the Company's registration statement,
prospectus and other communications in its Offering contained false and
materially misleading statements. HighwayMaster believes that the
plaintiffs' claims are without merit and the Company intends to
vigorously defend the lawsuits.
Item 2. Changes in Securities -- None.
Item 3. Defaults Upon Senior Securities -- None.
Item 4. Submission of Matters to a Vote of Security Holders -- None.
Item 5. Other Information -- None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See the Index to Exhibits.
(b) Reports on Form 8-K --
Two reports on Form 8-K were filed during the first quarter of 1996.
The first was filed on February 16, 1996, disclosing the Company's
litigation against AT&T. The second was filed on March 11, 1996,
disclosing termination of the Company's agreement with AT&T.
9
<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 thereunto duly authorized.
HIGHWAYMASTER COMMUNICATIONS, INC.
Date: May 14, 1996
By: /s/ William C. Saunders
-------------------------------------
William C. Saunders
President and Chief Executive Officer
By: /s/ Steven C. Whitehead
-------------------------------------
Steven C. Whitehead
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
10
<PAGE>
- - ----------------------------------------------------------------------------
- - ----------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 10-Q
QUARTERLY REPORT
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
_______________
HIGHWAYMASTER COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
EXHIBITS
- - ----------------------------------------------------------------------------
- - ----------------------------------------------------------------------------
<PAGE>
INDEX TO EXHIBITS
<TABLE>
EXHIBIT
NUMBER TITLE
------- -----
<C> <S> <C>
3.1 Certificate of Incorporation of the Company, as amended. (1)
3.2 Form of Amended By-Laws of the Company. (1)
4.1 Specimen of certificate representing Common Stock, $.01 par
value, of the Company. (1)
4.2 Subscription Agreement, dated February 4, 1994, by and
among the Company and the Purchasers listed on the
Schedule thereof. (1)
4.3 Stockholders' Agreement, dated as of February 4, 1994,
among the Company, Carlyle HighwayMaster Investors, L.P.,
Carlyle HighwayMaster Investors II, L.P., Chase Manhattan
Investment Holdings, Inc., Clipper/Merban, L.P.,
Clipper/Merchant Partners, L.P., Clipper Capital Associates,
L.P., Erin Mills International Investment Corporation, F.U.
Enterprises, Ltd., By-Word Technologies, Inc., Robert S.
Folsom and Robert T. Hayes. (1)
4.4 Addendum No. 1 to Subscription Agreement and
Stockholders Agreement of the Company, dated March 28,
1994, among the Company, Carlyle HighwayMaster
Investors, L.P., Carlyle HighwayMaster Investors II L.P., H.M.
Rana Investments Limited, TC Group, L.L.C., Chase
Manhattan Investment Holdings, Inc., Clipper/Merban, L.P.,
Clipper/Merchant Partners, L.P., Clipper Capital Associates,
L.P., Erin Mills International Investment Corporation, F.U.
Enterprises, Ltd., By-Word Technologies, Inc., Robert S.
Folsom and Robert T. Hayes. (1)
4.5 Consent of Security Holders of the Company and Second Amendment
to Stockholders' Agreement, dated November 1994, among the Company,
the former shareholders of By-Word Technologies, Inc. listed on
Exhibit A thereto, Carlyle HighwayMaster Investors, L.P., Carlyle
HighwayMaster Investor II, L.P., TC Group, L.L.C., H.M. Rana
Investments Limited, Chase Manhattan Investment Holdings, Inc.,
Clipper/Merban, L.P., Clipper/Merchant Partners, L.P., Clipper
Capital Associates, L.P., Erin Mills International Investment
Corporation, Robert S. Folsom and Robert T. Hayes. (1)
10.1 License Agreement, dated April 23, 1992, by and between
Voice Control Systems and the Company (as successor to
By-Word Technologies, Inc.) (1)
<PAGE>
EXHIBIT
NUMBER TITLE
------- -----
10.2 Agency Agreement, dated February 1, 1993, between the
Company and Saunders, Lubinski & White, Inc. (1)
10.3 Employment Agreement, dated February 4, 1994, by and
between HighwayMaster Corporation and William C.
Kennedy, Jr., as amended. (1) (5)
10.4 Employment Agreement, dated February 4, 1994, by and
between HighwayMaster Corporation and William C.
Saunders, as amended. (1) (5)
10.5 Employment Agreement, dated November 23, 1994, by and
between HighwayMaster Corporation and Gordon D.
Quick. (1) (5)
10.6 1994 Incentive Stock Option Plan of the Company, dated
February 4, 1994. (1) (5)
10.7 Agreement, dated June 29, 1993, between the Company and
American Telephone & Telegraph Company. (1) (2)
10.8 Mobile Communications (Voice and Data) Services Agreement,
dated as of July 15, 1993, between the Company and EDS
Personal Communications Corporation, as amended. (1) (2)
10.9 Services Agreement, dated March 14, 1995, between the
Company and GTE Telecommunications Services
Incorporated. (1) (2)
10.10 Services Agreement, dated March 20, 1996, between the
Company and GTE-Mobile Communications Service
Corporation. (3) (4)
10.11 Agreement, dated June 8, 1994, between the Company and
Truckstops of America, Inc. (1)
10.12 Amendment dated November 16, 1995 to that certain Mobile
Communications (Voice and Data) Services Agreement,
dated as of July 15, 1995, between the Company and EDS
Personal Communications Corporation. (3) (4)
10.13 Letter Agreement, dated April 5, 1995, between the Company
and IEX Corporation. (1)
10.14 Product Development Agreement dated December 21, 1995,
between the Company and IEX Corporation. (3) (4)
10.15 Form of Note Extension Option Agreement, dated March 29,
1996, between HighwayMaster Communications, Inc.,
<PAGE>
EXHIBIT
NUMBER TITLE
------- -----
HighwayMaster Corporation and certain noteholders of
HighwayMaster Communications, Inc. (3)
10.16 Letter Agreement, dated February 19, 1996, between the
Company and IEX Corporation. (3)
10.17 Form of Adoption Agreement, Regional Prototype Cash or
Deferred Profit-Sharing Plan and Trust Sponsored by McKay
Hochman Co., Inc., relating to the HighwayMaster
Corporation 401(k) Plan. (1)
10.18 Employment Agreement, dated May 4, 1995, by and between
HighwayMaster Corporation and Steven C. Whitehead. (1,
filed as exhibit 10.21)
10.19 Note Exchange and Amendments Agreements, dated May 26, 1995,
between the Company and Archery Partners, Chase Manhattan
Investment Holdings, Inc., Carlyle HighwayMaster Investors,
L.P., Carlyle HighwayMaster Investors II, L.P., H.M. Rana
Investments Limited, TC Group, L.L.C., Clipper/Merban, L.P.,
Clipper/Merchant Partners, L.P., Clipper Capital Associates,
L.P., Erin Mills International Investment Corporation,
Robert S. Folsom, Margaret D. Folsom, R. Stephen Folsom,
Robert T. Hayes, Cynthia Ann Hayes, Alicia Ellen Hayes,
JoAnn Hayes, William C. Saunders, William C. Kennedy, Jr.,
Donald M. Kennedy and Mark D. Ein. (1)
10.20 Form of Agreement, dated November 1, 1995, between the Company
and Rocketsports, Inc. (3) (4)
11 Statement re Computation of Per Share Earnings. (6)
27 Financial Data Schedules. (6)
</TABLE>
______________________________________________________________
(1) Filed in connection with the Company's Registration
Statement on Form S-1, as amended (No. 33-91486) effective
June 22, 1995.
(2) Certain confidential portions deleted pursuant to Order
Granting Application for Confidential Treatment issued in
connection with Registration Statement on Form S-1 (No.
33-91486) effective June 22, 1995.
(3) Filed in connection with the Company's 1995 Annual Report
on Form 10-K.
(4) Certain confidential portions deleted pursuant to Application
for Confidential Treatment filed in connection with the 1995
Annual Report on Form 10-K.
(5) Indicates management or compensatory plan or arrangement
required to be identified pursuant to Item 14(a)(4).
(6) Filed herewith.
<PAGE>
EXHIBIT 11
HIGHWAYMASTER COMMUNICATIONS, INC. AND SUBSIDIARY
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
THREE MONTHS
ENDED MARCH 31,
-------------------------
1996 1995
----------- -----------
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS
Loss before accretion and extraordinary item ($6,368,000) ($7,243,000)
Accretion of Series B preferred stock (610,000) (494,000)
----------- -----------
Net loss applicable to common stockholders ($6,978,000) ($7,737,000)
----------- -----------
----------- -----------
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Weighted average number of shares outstanding,
net of treasury shares 22,021,664 17,492,332
Additional weighted average shares for assumed
exercise of stock options, net of shares
assumed to be repurchased with exercise
proceeds --- 1,219,009
----------- -----------
Weighted average number of shares outstanding 22,021,664 18,711,341
----------- -----------
----------- -----------
NET LOSS PER COMMON SHARE APPLICABLE TO COMMON
STOCKHOLDERS
Loss before accretion ($0.29) ($0.39)
Accretion of Series B preferred stock (0.03) (0.03)
----------- -----------
Net loss per common share applicable to common
stockholders ($0.32) ($0.41)
----------- -----------
----------- -----------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 11393
<SECURITIES> 0
<RECEIVABLES> 7100
<ALLOWANCES> 789
<INVENTORY> 9637
<CURRENT-ASSETS> 28618
<PP&E> 6379
<DEPRECIATION> 964
<TOTAL-ASSETS> 36979
<CURRENT-LIABILITIES> 10348
<BONDS> 11772
0
0
<COMMON> 223
<OTHER-SE> 5900
<TOTAL-LIABILITY-AND-EQUITY> 36979
<SALES> 2771
<TOTAL-REVENUES> 6291
<CGS> 2730
<TOTAL-COSTS> 5288
<OTHER-EXPENSES> 7139
<LOSS-PROVISION> 64
<INTEREST-EXPENSE> 538
<INCOME-PRETAX> (6368)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6368)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6368)
<EPS-PRIMARY> (0.32)
<EPS-DILUTED> 0
</TABLE>
