<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(X)          Quarterly Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                         For the quarterly period ended:

                               SEPTEMBER 30, 2002

                                       or

( )         Transition Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                         Commission File Number: 0-9463

                                  ULTRAK, INC.

             (Exact name of registrant as specified in its charter)

Delaware                                                     75-2626358
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                           Identification No.)

1301 Waters Ridge Drive,
Lewisville, Texas                                              75057
(Address of principal executive offices)                     (Zip Code)

                                 (972) 353-6651
              (Registrant's telephone number, including area code)

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 the registrant's common stock as of
October 31, 2002: 14,046,588 shares of $0.01 par value common stock.


<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

                        QUARTER ENDED SEPTEMBER 30, 2002

                                      INDEX

<Table>
<Caption>
Part I: Financial Information                                                           Page No.
                                                                                        --------
<S>                                                                                     <C>

Consolidated Balance Sheets                                                                    3

Consolidated Statements of Operations                                                          5

Consolidated Statements of Cash Flows                                                          8

Notes to Consolidated Financial Statements                                                    10

Management's Discussion and Analysis of Financial Condition and Results of Operations         24

Quantitative and Qualitative Disclosures About Market Risk                                    30

Controls and Procedures                                                                       30



Part II: Other Information                                                                    31

Submission of Matters to a Vote of Security Holders

Exhibits and Reports on Form 8-K
</Table>


                                       2
<PAGE>


                          ULTRAK, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<Table>
<Caption>
                                                                            SEPTEMBER 30,     DECEMBER 31,
                                                                                2002              2001
                                                                            -------------     ------------
                                                                            (unaudited)
<S>                                                                         <C>               <C>

ASSETS


CURRENT ASSETS
    Cash and cash equivalents                                               $      2,867      $      3,300
    Trade accounts receivable, less allowance for doubtful accounts
        of $2,227,000 and $2,503,000 at September 30, 2002 and
        December 31, 2001, respectively                                           22,921            25,132
    Inventories, net                                                              26,012            26,326
    Prepaid expenses and other current assets                                      2,680             3,633
    Deferred income taxes                                                            236             6,309
                                                                            ------------      ------------


            Total current assets                                                  54,716            64,700


PROPERTY, PLANT AND EQUIPMENT, at cost                                            33,062            33,324
    Less accumulated depreciation and amortization                               (15,720)          (14,529)
                                                                            ------------      ------------
                                                                                  17,342            18,795


OTHER ASSETS
    Goodwill                                                                      10,727            36,075
    Intangible assets, net                                                         1,832             2,359
    Other                                                                            366               331
                                                                            ------------      ------------
                                                                                  12,925            38,765

            Total assets                                                    $     84,983      $    122,260
                                                                            ============      ============
</Table>




                                       3
<PAGE>



                          ULTRAK, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<Table>
<Caption>
                                                                      SEPTEMBER 30,     DECEMBER 31,
                                                                          2002              2001
                                                                      -------------     ------------
                                                                       (unaudited)
<S>                                                                   <C>               <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable - trade                                           $      9,088      $     12,776
   Accrued expenses                                                          7,531             7,640
   Accrued restructuring costs                                                 421               650
   Income tax payable                                                          712                --
   Line of credit                                                           12,267            15,012
   Other debt                                                                  265               809
                                                                      ------------      ------------

         Total current liabilities                                          30,284            36,887

FINANCING OBLIGATION                                                         6,600             6,600


STOCKHOLDERS' EQUITY
   Preferred stock, $5 par value, issuable in series;
      2,000,000 shares authorized; Series A, 12%
      cumulative convertible; 195,351 shares authorized,
      issued and outstanding                                                   977               977
   Common stock, $.01 par value; 50,000,000 shares authorized;
      17,514,238 shares issued                                                 175               175
   Additional paid-in-capital                                              162,269           162,269
   Accumulated deficit                                                     (73,861)          (41,804)
   Accumulated other comprehensive loss                                     (2,778)           (4,161)
   Treasury stock, at cost (3,467,650 common shares)                       (38,683)          (38,683)
                                                                      ------------      ------------

         Total stockholders' equity                                         48,099            78,773
                                                                      ------------      ------------
         Total liabilities and stockholders' equity                   $     84,983      $    122,260
                                                                      ============      ============
</Table>


                                       4
<PAGE>
                          ULTRAK, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<Table>
<Caption>
                                                            THREE MONTHS        THREE MONTHS
                                                               ENDED                ENDED
                                                         SEPTEMBER 30,2002    SEPTEMBER 30,2001
                                                         -----------------    -----------------
                                                            (unaudited)          (unaudited)
<S>                                                      <C>                  <C>

Net sales                                                   $     36,690         $     40,045
Cost of sales (exclusive of depreciation shown
  separately below)                                               24,188               28,392
                                                            ------------         ------------

      Gross profit                                                12,502               11,653

Other operating costs:
   Selling, general and administrative                            12,107               11,120
   Depreciation and amortization                                     803                1,357
                                                            ------------         ------------
                                                                  12,910               12,477
                                                            ------------         ------------

      Operating loss                                                (408)                (824)

Other income (expense):
   Interest expense                                                 (521)                (716)
   Interest income                                                    10                    2
   Foreign exchange gains (losses)                                     1                 (124)
   Gain on sale of division                                           --                1,208
   Costs incurred for sale of business                              (700)
   Other, net                                                        190                   31
                                                            ------------         ------------
                                                                  (1,014)                 401
                                                            ------------         ------------

      Loss before income taxes                                    (1,422)                (423)

Income tax expense                                                  (214)                  --
                                                            ------------         ------------

      Net loss                                                    (1,636)                (423)


Dividend requirements on preferred stock                             (29)                 (29)
                                                            ------------         ------------

      Net loss allocable to common stockholders             $     (1,665)        $       (452)
                                                            ============         ============

      Net loss per share
         Basic                                              $      (0.12)        $      (0.04)
                                                            ============         ============
         Diluted                                            $      (0.12)        $      (0.04)
                                                            ============         ============


      Number of common shares used in computations:
         Basic                                                14,046,588           11,688,888
         Diluted                                              14,046,588           11,688,888
</Table>



                                       5
<PAGE>
                          ULTRAK, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<Table>
<Caption>
                                                                         NINE MONTHS         NINE MONTHS
                                                                             ENDED              ENDED
                                                                      SEPTEMBER 30, 2002   SEPTEMBER 30,2001
                                                                      ------------------   -----------------
                                                                          (unaudited)         (unaudited)
<S>                                                                      <C>                  <C>

Net sales                                                                $    107,670         $    124,631
Cost of sales (exclusive of depreciation shown separately below)               71,701               86,070
                                                                         ------------         ------------

      Gross profit                                                             35,969               38,561

Other operating costs:
   Selling, general and administrative                                         37,443               35,741
   Depreciation and amortization                                                2,511                3,952
                                                                         ------------         ------------
                                                                               39,954               39,693
                                                                         ------------         ------------

      Operating loss                                                           (3,985)              (1,132)

Other income (expense):
   Interest expense                                                            (2,136)              (2,535)
   Interest income                                                                 --                   31
   Foreign exchange gains (losses)                                                194                 (123)
   Gain on sale of investments                                                     --                7,727
   Gain on sale of division                                                        --                1,208
   Costs incurred for sale of business                                           (700)
   Other, net                                                                     544                  126
                                                                         ------------         ------------
                                                                               (2,098)               6,434
                                                                         ------------         ------------

      Income (loss) before income taxes and cumulative
         effect of accounting change                                           (6,083)               5,302


Income tax benefit                                                                229                   --
                                                                         ------------         ------------

      Income (loss) before cumulative effect of accounting change              (5,854)               5,302

Cumulative effect of accounting change                                        (26,115)                  --
                                                                         ------------         ------------

      Net income (loss)                                                       (31,969)               5,302

Dividend requirements on preferred stock                                          (88)                 (88)
                                                                         ------------         ------------

      Net income (loss) allocable to common stockholders                 $    (32,057)        $      5,214
                                                                         ------------         ------------
</Table>


                                       6
<PAGE>


                          ULTRAK, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<Table>
<Caption>
                                                                NINE MONTHS        NINE MONTHS
                                                                   ENDED              ENDED
                                                            SEPTEMBER 30, 2002  SEPTEMBER 30, 2001
                                                            ------------------  ------------------
                                                                (unaudited)        (unaudited)
<S>                                                           <C>               <C>

Net income (loss) per share - basic:
   Income (loss) allocable to common stockholders before               (0.42)               0.45
      cumulative effect of accounting change
   Cumulative effect of accounting change                              (1.86)                 --
                                                              --------------      --------------
   Income (loss) allocable to common stockholders                      (2.28)               0.45
                                                              ==============      ==============


Net income (loss) per share - diluted:
   Income (loss) allocable to common stockholders before               (0.42)               0.44
      cumulative effect of accounting change
   Cumulative effect of accounting change                              (1.86)                 --
                                                              --------------      --------------
   Income (loss) allocable to common stockholders                      (2.28)               0.44
                                                              ==============      ==============


   Number of common shares used in computations:
      Basic                                                       14,046,588          11,688,888
      Diluted                                                     14,046,588          12,132,990
</Table>


                                       7
<PAGE>

                          ULTRAK, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                          NINE MONTHS           NINE MONTHS
                                                                              ENDED                ENDED
                                                                       SEPTEMBER 30, 2002   SEPTEMBER 30, 2001
                                                                          (unaudited)           (unaudited)
                                                                       ------------------   ------------------
<S>                                                                    <C>                  <C>

Cash flows from operating activities:
   Net income (loss)                                                      $    (31,969)        $      5,302
   Adjustments to reconcile net income (loss) to net cash provided by
      operating activities:
      Cumulative effect of accounting change                                    26,115                   --
      Loss on disposal of fixed assets                                             104                   --
      Gain on sale of investments                                                   --               (7,762)
      Gain on sale of division                                                      --               (1,208)
      Depreciation and amortization                                              2,511                3,952
      Provision for losses on accounts receivable                                   97                  295
      Changes in operating assets and liabilities:
         Accounts receivable                                                     2,540                1,563
         Inventories                                                               562               (1,374)
         Prepaid expenses and other current assets                               1,181                  110
         Income taxes                                                            6,785                 (612)
         Other assets                                                              483                  142
         Accounts payable                                                       (3,591)               2,647
         Accrued restructuring costs                                              (229)              (2,583)
         Accrued and other current liabilities                                    (377)              (2,538)
                                                                          ------------         ------------
            Net cash provided by (used in) operating activities                  4,212               (2,066)
                                                                          ------------         ------------

Cash flows from investing activities:
      Proceeds from the sale of Detection Systems, Inc. common stock                --               23,211
      Proceeds from the sale of division                                            --                2,594
      Purchases of property and equipment                                         (707)                (755)
      Software development costs                                                  (510)              (1,248)
      Proceeds from the sale of property and equipment                              64                   --
      Earnout payments on prior acquisitions                                      (237)
      Other                                                                         --                  (57)
                                                                          ------------         ------------
            Net cash provided by (used in) investing activities                 (1,390)              23,745
                                                                          ------------         ------------
</Table>


                                       8
<PAGE>

                          ULTRAK, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                 NINE MONTHS          NINE MONTHS
                                                                    ENDED                ENDED
                                                              SEPTEMBER 30, 2002   SEPTEMBER 30, 2001
                                                                 (unaudited)          (unaudited)
                                                              ------------------   ------------------
<S>                                                           <C>                  <C>

Cash flows from financing activities:
      Repayments on revolving line of credit                           (2,745)             (17,504)
      Repayments on other debt                                           (544)                (986)
      Repayments on mortgage loan                                          --               (4,100)
      Payment of preferred stock dividends                                (88)                 (88)
                                                                 ------------         ------------
         Net cash used in financing activities                         (3,377)             (22,678)
                                                                 ------------         ------------

Net decrease in cash and cash equivalents                                (555)                (999)

Effect of exchange rate changes on cash                                   122                 (618)

Cash and cash equivalents at beginning of the period                    3,300                3,751
                                                                 ------------         ------------
Cash and cash equivalents at end of the period                   $      2,867         $      2,134
                                                                 ============         ============

Supplemental cash flow information:
   Cash paid during the period for:
      Interest                                                   $      1,489         $      2,305
                                                                 ============         ============
      Income taxes                                               $         34         $        293
                                                                 ============         ============

Supplemental schedule of noncash investing and financing:
   Mortgage financing                                            $         --         $     11,500
                                                                 ============         ============
</Table>

               The accompanying notes are an integral part of the
                       consolidated financial statements.


                                       9
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

1. Basis of Presentation:

The accompanying unaudited interim consolidated financial statements include the
accounts of Ultrak, Inc. and its subsidiaries ("Ultrak" or "the Company"). All
significant intercompany balances and transactions have been eliminated in
consolidation.

The interim financial statements are prepared on an unaudited basis in
accordance with accounting principles for interim reporting and do not include
all of the information and disclosures required by accounting principles
generally accepted in the United States of America for complete financial
statements. All adjustments which are, in the opinion of management, necessary
for a fair presentation of the results of operations for the interim periods
have been made and are of a recurring nature unless otherwise disclosed herein.
The results of operations for such interim periods are not necessarily
indicative of results of operations for a full year. For further information,
refer to the consolidated financial statements and notes to the consolidated
financial statements for the year ended December 31, 2001 included in the Ultrak
Annual Report on Form 10-K, as amended.

2. Earnings (Loss) Per Share:

The Company computes basic earnings (loss) per share based on the weighted
average number of common shares outstanding. Diluted earnings per share is
computed based on the weighted average number of shares outstanding, plus the
number of additional common shares that would have been outstanding if dilutive
potential common shares had been issued.


                                       10
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                                   (UNAUDITED)

2. Earnings Per Share, continued:

Following is a reconciliation of basic and diluted earnings (loss) per share:

<Table>
<Caption>
                                                        For the Three Months Ended                For the Three Months Ended
                                                            September 30, 2002                        September 30, 2001
                                                 --------------------------------------    -------------------------------------
                                                       Net                        Per            Net                       Per
                                                       Loss                      Share           Loss                     Share
                                                 (in thousands)   Shares        Amount     (in thousands)   Shares       Amount
                                                 --------------  ----------   ----------   -------------- ----------   ----------
<S>                                                <C>           <C>          <C>           <C>           <C>          <C>

Basic earnings per share:
Income (loss) allocable to common stockholders
   before cumulative effect of accounting change   $   (1,665)   14,046,588   $    (0.12)   $     (452)   11,688,888   $    (0.04)
                                                                              ==========                               ==========

Effect of dilutive securities
   Stock options                                           --            --                         --            --
   Convertible preferred stock                             --            --                         --            --
                                                   ----------    ----------                 ----------    ----------

Diluted earnings (loss) per share before
   cumulative effect of accounting change          $   (1,665)   14,046,588   $    (0.12)   $     (452)   11,688,888   $    (0.04)
                                                   ==========    ==========   ==========    ==========    ==========   ==========
</Table>


<Table>
<Caption>
                                                         For the Nine Months Ended                For the Nine Months Ended
                                                            September 30, 2002                       September 30, 2001
                                                 ---------------------------------------  --------------------------------------
                                                      Net                        Per            Net                      Per
                                                     Loss                       Share          Income                   Share
                                                 (in thousands)    Shares       Amount    (in thousands)   Shares       Amount
                                                 --------------  ----------   ----------  -------------- ----------   ----------
<S>                                              <C>             <C>          <C>         <C>            <C>          <C>

Basic earnings per share:
Income (loss) allocable to common stockholders
   before cumulative effect of accounting change   $   (5,942)   14,046,588   $    (0.42)   $    5,214   11,688,888   $     0.45
                                                                              ==========                              ==========
Effect of dilutive securities
   Stock options                                           --            --                         --       37,121
   Convertible preferred stock                             --            --                         88      406,981
                                                 ------------    ----------               ------------   ----------
Diluted earnings (loss) per share before
   cumulative effect of accounting change          $   (5,942)   14,046,588   $    (0.42)   $    5,302   12,132,990   $     0.44
                                                   ==========    ==========   ==========    ==========   ==========   ==========
</Table>

For the three months ended September 30, 2002 and 2001, 1,435,581 and 735,277
stock options were outstanding, respectively, but were not included in the
computation of diluted earnings (loss) per share because the effect would have
been anti-dilutive. For the three months ended September 30, 2002 and 2001,
195,351 shares of preferred stock, which convert to 406,981 shares of common
stock, were excluded from the computation of diluted loss per share because the
effect was anti-dilutive. For the nine months ended September 30, 2002 and 2001,
1,435,581 and 578,783 stock options were outstanding, respectively, but were not
included in the computation of diluted earnings (loss) per share because the
effect would have been anti-dilutive. For the nine months ended September 30,
2002, 195,351 shares of preferred stock, which convert to 406,981 shares of
common stock, were excluded from the computation of diluted loss per share
because the effect was anti-dilutive.

See Note 7 for proforma calculation of earnings (loss) per share for the effect
of change in accounting for goodwill amortization.


                                       11
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                                   (UNAUDITED)

3. Segment Disclosure:

The Company has four business segments: United States-Professional Security
Group (US-PSG), Diversified Sales Group (DSG), International-Professional
Security Group (Int'l-PSG) and Supply. Upon adoption of SFAS 142 (see Note 7),
the Company analyzed its segments to determine the reporting units. A reporting
unit is an operating segment or one level below an operating segment, referred
to as a component. If two or more components have similar economic
characteristics, they may be aggregated and deemed as a single reporting unit.
The Company's segments are its reporting units, except for the US-PSG Segment,
to which it has an access control systems reporting unit and a video
surveillance product reporting unit, and the DSG Segment, to which it has a
consumer / retail reporting unit and an industrial video products reporting
unit. The segments are differentiated by the customers serviced as follows:

       US-PSG

       This segment consists of sales in the United States to professional
       security dealers, distributors, installers and certain large end users of
       professional security products.

       DSG

       This segment sells video and security products to industrial markets and
       consumers. This segment includes sales to Sam's Club, which discontinued
       carrying the Company's Exxis security products in its stores in October
       of 2001.

       International-PSG

       This segment sells to professional security dealers, distributors,
       installers and certain large end users of professional security products
       outside the United States.

       Supply

       This segment sells to the US-PSG and International-PSG segments products
       and systems manufactured by the Company's Ohio and California facilities.
       In 2001, this segment also included a manufacturing facility in
       Australia.

The Company's underlying accounting records are maintained on a legal entity
basis for government and public reporting requirements. Segment disclosures are
on a performance basis consistent with internal management reporting. The
Company evaluates performance based on earnings from operations before income
taxes and other income and expense. The Corporate column includes corporate
overhead-related items.

Prior year segment information has been reclassified to reflect changes in the
Company's organizational structure in 2002.


                                       12
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                                   (UNAUDITED)

3. Segment Disclosure, continued:

The following tables provide financial data by segment for the periods noted
(in thousands):

<Table>
<Caption>
Three months ended September 30, 2002           US-PSG        DSG      Int'l-PSG    Supply     Corporate    Total
-------------------------------------         ----------  ----------  ----------  ----------  ----------  ----------
<S>                                           <C>         <C>         <C>         <C>         <C>         <C>

Total revenue                                 $   19,915  $    7,359  $    9,617  $    3,595  $      158  $   40,644
Intersegment revenue                                (153)         (1)       (215)     (3,574)        (11)     (3,954)
                                              ----------  ----------  ----------  ----------  ----------  ----------
Revenue from external customers               $   19,762  $    7,358  $    9,402  $       21  $      147  $   36,690
                                              ==========  ==========  ==========  ==========  ==========  ==========

Gross profit (loss)                                7,694       1,959       3,199        (399)         49      12,502

Selling, general and administrative expense        3,021         629       3,066         196       5,195      12,107
Depreciation and amortization expense                 61          20          75          50         597         803
Operating profit (loss)                            4,612       1,310          58        (645)     (5,743)       (408)
</Table>

<Table>
<Caption>
Three months ended September 30, 2001           US-PSG         DSG        Int'l-PSG      Supply       Corporate       Total
-------------------------------------         ----------    ----------   ----------    ----------    ----------    ----------
<S>                                           <C>           <C>          <C>           <C>           <C>           <C>

Total revenue                                 $   17,285    $   11,815   $   11,936    $    6,738    $      675    $   48,449
Intersegment revenue                                (113)           --       (1,147)       (6,634)         (510)       (8,404)
                                              ----------    ----------   ----------    ----------    ----------    ----------
Revenue from external customers               $   17,172    $   11,815   $   10,789    $      104    $      165    $   40,045
                                              ==========    ==========   ==========    ==========    ==========    ==========

Gross profit (Loss)                                5,558         2,831        3,604            89          (429)       11,653

Selling, general and administrative expense        3,223           862        3,202           666         3,167        11,120
Depreciation and amortization expense                311            52          253            56           685         1,357
Operating profit (loss)                            2,024         1,917          149          (633)       (4,281)         (824)
</Table>



                                       13
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                                   (UNAUDITED)

3. Segment Disclosure, continued:

The following tables provide financial data by segment for the periods noted
(in thousands):

<Table>
<Caption>
Nine months ended September 30, 2002            US-PSG          DSG        Int'l-PSG      Supply       Corporate       Total
------------------------------------          ----------    ----------    ----------    ----------    ----------    ----------
<S>                                           <C>           <C>           <C>           <C>           <C>           <C>
Total revenue                                 $   63,432    $   19,631    $   28,813    $   11,718    $      603    $  124,197
Intersegment revenue                              (3,836)           (2)       (1,037)      (11,481)         (171)      (16,527)
                                              ----------    ----------    ----------    ----------    ----------    ----------
Revenue from external customers               $   59,596    $   19,629    $   27,776    $      237    $      432    $  107,670
                                              ==========    ==========    ==========    ==========    ==========    ==========

Gross profit (loss)                               22,651         4,691         9,136          (578)           69        35,969

Selling, general and administrative expense        9,030         1,732         9,406         1,020        16,255        37,443
Depreciation and amortization expense                214            61           241           153         1,842         2,511
Operating profit (loss)                           13,407         2,898          (511)       (1,751)      (18,028)       (3,985)
</Table>

<Table>
<Caption>
Nine months ended September 30, 2001            US-PSG         DSG        Int'l-PSG      Supply       Corporate       Total
------------------------------------          ----------    ----------   ----------    ----------    ----------    ----------
<S>                                           <C>           <C>          <C>           <C>           <C>           <C>

Total revenue                                 $   56,278    $   35,244   $   44,665    $   18,134    $    1,287    $  155,608
Intersegment revenue                                (306)           --      (12,629)      (17,365)         (677)      (30,977)
                                              ----------    ----------   ----------    ----------    ----------    ----------
Revenue from external customers               $   55,972    $   35,244   $   32,036    $      769    $      610    $  124,631
                                              ==========    ==========   ==========    ==========    ==========    ==========

Gross profit                                      18,270         9,244       10,577           388            82        38,561

Selling, general and administrative expense       10,490         2,632        9,847           874        11,898        35,741
Depreciation and amortization expense                948           159          772           174         1,900         3,953
Operating profit (loss)                            6,832         6,453          (42)         (660)      (13,716)       (1,133)
</Table>

--------------------------------------------------------------------------------

The only material change in net assets by segment since the 2001 annual report
filed on Form 10-K relates to the presentation of goodwill. Prior to the
adoption of Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill
and Intangible Assets, the Company reported goodwill as it appeared on each
legal entity. A reconciliation of the goodwill by segment at December 31, 2001,
as a component of net assets, between Form 10-K and the current presentation
(see Note 7) is as follows:

The following table provides a reconciliation of goodwill by segment (in
thousands):

<Table>
<Caption>
December 31, 2001                               US-PSG         DSG       Int'l-PSG     Supply      Corporate       Total
-----------------                             ----------   ----------   ----------   ----------   ----------    ----------
<S>                                           <C>          <C>          <C>          <C>          <C>           <C>

Goodwill reported on Form 10-K                $       --   $       --   $       --   $      598   $   35,477    $   36,075
Reallocated to segments per SFAS 142              18,824          729       15,416           --      (34,969)           --
                                              ----------   ----------   ----------   ----------   ----------    ----------
Adjusted goodwill by segment                  $   18,824   $      729   $   15,416   $      598   $      508    $   36,075
                                              ==========   ==========   ==========   ==========   ==========    ==========
</Table>



                                       14
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                                   (UNAUDITED)

4. Foreign Operations:

Sales by geographic area were as follows (in thousands):


<Table>
<Caption>
               Three months ended September 30,    Nine months ended September 30,
               --------------------------------    -------------------------------
                     2002             2001              2002             2001
               ----------------   -------------    --------------   --------------
<S>            <C>                <C>              <C>              <C>

United States      $     27,288   $     29,256       $     79,894   $     92,595
Italy                     3,472          2,478              9,578          7,293
United Kingdom            2,103          2,037              6,434          5,288
Germany                   1,493          1,631              4,576          5,808
South Africa                955            905              2,659          2,795
Australia                   587            630              2,096          2,565
Poland                      389          1,325                950          2,232
Switzerland                 216            521                786          1,259
Singapore                   187            207                697            976
France                       --          1,055                 --          3,820
                   ------------   ------------       ------------   ------------
  Total revenues   $     36,690   $     40,045       $    107,670   $    124,631
                   ============   ============       ============   ============
</Table>


                                       15
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                                   (UNAUDITED)

5. Comprehensive Income (Loss):

Total comprehensive income (loss) is as follows:
(in thousands)

<Table>
<Caption>
                                               Three months        Three months
                                                 ended                ended
                                            September 30, 2002  September 30, 2001
                                            ------------------  ------------------
<S>                                         <C>                 <C>

Net income (loss)                              $     (1,636)       $       (423)

Other comprehensive income (loss):

  Currency translation adjustment                      (198)             (2,331)
                                               ------------        ------------

Comprehensive loss                             $     (1,834)       $     (2,754)
                                               ============        ============
</Table>


Total comprehensive income (loss) is as follows:
(in thousands)

<Table>
<Caption>
                                                 Nine months        Nine months
                                                   ended               ended
                                             September 30, 2002  September 30, 2001
                                             ------------------  ------------------
<S>                                          <C>                 <C>

Net income (loss)                              $    (31,969)       $      5,302

Other comprehensive income (loss):

  Currency translation adjustment                     1,383              (3,111)
                                               ------------        ------------

Comprehensive income (loss)                    $    (30,586)       $      2,191
                                               ============        ============
</Table>


At September 30, 2002 and December 31, 2001, accumulated other comprehensive
loss related entirely to foreign currency translation adjustments.


                                       16
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                                   (UNAUDITED)

6. Accrued Restructuring Charges:

As of December 31, 2001, the Company had accruals for severance and other
related employee costs and leased facilities and other termination costs for its
subsidiaries in France and Belgium. The current period accrual activity related
to these charges is summarized as follows:

(in thousands):

<Table>
<Caption>
                                                   Accrued at                           Accrued at
                                               December 31, 2001    Paid in Cash    September 30, 2002
                                               -----------------  ---------------   ------------------
<S>                                            <C>                <C>                <C>

Severance and other related employee costs      $           177   $            34    $           143
Leased facilities and other termination costs               473               195                278
                                                ---------------   ---------------    ---------------
                                                $           650   $           229    $           421
                                                ===============   ===============    ===============
</Table>


                                       17
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                                   (UNAUDITED)

7. New Accounting Pronouncements:

In conjunction with the adoption of SFAS 142, the Company has completed its
transitional impairment analysis as required by SFAS 142. In connection with its
transitional impairment analysis, the Company completed a two step process to
determine the amount of the impairment. The first step involved comparison of
the fair value of the reporting unit to the carrying value to determine if an
impairment exists. The second step involved comparison of the implied fair value
of the goodwill to the carrying value of the goodwill. The implied fair value of
the goodwill was determined in the same manner as the amount of goodwill
recognized in a business combination. As a result, the Company has recorded a
non-cash charge of $26.1 million to reduce the carrying value of its goodwill.
Such charge is reflected, effective January 1, 2002, as a cumulative effect of
an accounting change in the accompanying consolidated statement of operations.
In calculating the impairment charge, the fair value of the impaired reporting
units underlying the segments were estimated using discounted cash flow
methodology or recent comparable transactions.

A summary of the changes in the Company's goodwill during the nine months ended
September 30, 2002, by business segment, are as follows (in thousands):

<Table>
<Caption>
                                                 US-PSG       DSG      Int'l-PSG    Supply     Corporate    Total
                                               ----------  ---------- ----------  ----------  ----------  ----------
<S>                                            <C>         <C>        <C>         <C>         <C>         <C>

Net carrying value at December 31, 2001        $   18,824  $      729 $   15,416  $      598  $      508  $   36,075

Earnout payments on prior acquisitions                 --          --        767          --          --         767
Impairment losses                                 (14,762)         --    (10,591)       (412)       (350)    (26,115)
                                               ----------  ---------- ----------  ----------  ----------  ----------

Net carrying value at September 30, 2002       $    4,062  $      729 $    5,592  $      186  $      158  $   10,727
                                               ==========  ========== ==========  ==========  ==========  ==========
</Table>

The impairment loss recorded in the US-PSG segment was in the access control
reporting unit.

Intangible assets consist of the following (in thousands):

<Table>
<Caption>
                                                           September 30, 2002                      December 31, 2001
                                  Weighted       --------------------------------------   --------------------------------------
                                  average           Gross                       Net          Gross                        Net
                                amortization      Carrying     Accumulated    Carrying     Carrying    Accumulated     Carrying
                               period (years)       Value     Amortization     Value         Value     Amortization      Value
                                                 ----------   ------------   ----------   ----------   ------------   ----------
<S>                            <C>               <C>          <C>            <C>          <C>          <C>            <C>

Intangible assets subject to
  amortization
    Loan costs                        2.4         $    1,544          (936)          607   $    1,329          (523)          806
    Licensing agreements              3.7              1,540          (567)          973        1,540          (263)        1,277
    Patents and trademarks           17.2                329           (77)          252          337           (61)          276
                                                  ----------    ----------    ----------   ----------    ----------    ----------
Total intangible assets subject to
  amortization                                    $    3,412        (1,581)        1,832   $    3,206          (847)        2,359
                                                  ==========    ==========    ==========   ==========    ==========    ==========

Intangible assets not subject to
  amortization

    Goodwill                                                                  $   10,727                               $   36,075
                                                                              ==========                               ==========
</Table>



                                       18
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                                   (UNAUDITED)

7. New Accounting Pronouncements, continued:

Amortization expense related to intangible assets totaled $201,000 and $71,000
during the three months ended September 30, 2002 and 2001 and $733,000 and
$205,000 during the nine months September 30, 2002 and 2001. The aggregate
estimated future amortization expense for intangible assets for each of the five
succeeding years as of September 30, 2002 is as follows:

(in thousands):

<Table>
<S>                              <C>
Remainder of 2002                $        190
2003                                      760
2004                                      565
2005                                      132
2006                                       21
                                 ------------

Total                            $      1,669
                                 ============
</Table>


                                       19
<PAGE>

                          ULTRAK INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                                   (UNAUDITED)

7. New Accounting Pronouncements, continued:

Net income (loss) before cumulative effect of accounting change for the three
and nine months ended September 30, 2002 and 2001, adjusted to exclude
amortization expense related to goodwill, is as follows (in thousands):

<Table>
<Caption>
                                                 THREE MONTHS         THREE MONTHS
                                                    ENDED                ENDED
                                              SEPTEMBER 30, 2002   SEPTEMBER 30, 2001
                                              ------------------   ------------------
                                                 (unaudited)          (unaudited)
<S>                                           <C>                  <C>

Net earnings (loss)

  Reported net loss allocable to common
  stockholders                                  $     (1,665)        $       (452)
  Goodwill amortization                                   --                  438
                                                ------------         ------------
  Adjusted net loss allocable to common
  stockholders                                  $     (1,665)        $        (14)
                                                ============         ============

Basic earnings (loss) per share

  Reported basic loss per share allocable
  to common shareholders                        $      (0.12)        $      (0.04)
  Goodwill amortization                                   --                 0.04
                                                ------------         ------------
  Adjusted basic loss per share                 $      (0.12)        $      (0.00)
                                                ============         ============

Diluted earnings (loss) per share

  Reported diluted loss per share allocable
  to common stockholders                        $      (0.12)        $      (0.04)
  Goodwill amortization                                   --                 0.04
                                                ------------         ------------
  Adjusted diluted loss per share               $      (0.12)        $      (0.00)
                                                ============         ============
</Table>


                                       20
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                                   (UNAUDITED)

7. New Accounting Pronouncements, continued:

<Table>
<Caption>
                                                 NINE MONTHS        NINE MONTHS
                                                    ENDED              ENDED
                                             SEPTEMBER 30, 2002  SEPTEMBER 30, 2001
                                             ------------------  ------------------
                                                 (unaudited)        (unaudited)
<S>                                            <C>                <C>

Net earnings (loss)

  Reported net earnings (loss) allocable to
  common stockholders before cumulative
  effect of accounting change                  $     (5,942)      $      5,214
  Goodwill amortization                                  --              1,200
                                               ------------       ------------

  Adjusted net earnings (loss) allocable to
  common stockholders                          $     (5,942)      $      6,414
                                               ============       ============

Basic earnings (loss) per share

  Reported net earnings (loss) allocable to
  common stockholders before cumulative
  effect of accounting change                  $      (0.42)      $       0.45
  Goodwill amortization                                  --               0.10
                                               ------------       ------------

  Adjusted basic earnings (loss) per
  share                                        $      (0.42)      $       0.55
                                               ============       ============

Diluted earnings (loss) per share

  Reported net earnings (loss) allocable to
  common stockholders before cumulative
  effect of accounting change                  $      (0.42)      $       0.44
  Goodwill amortization                                  --               0.10
                                               ------------       ------------

  Adjusted diluted earnings (loss) per
  share                                        $      (0.42)      $       0.54
                                               ============       ============
</Table>


                                       21
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                                   (UNAUDITED)

7. New Accounting Pronouncements, continued:

SFAS 144

SFAS No. 144 addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. The implementation of this standard did not have
an effect on the Company's financial position, results of operations or cash
flows.

SFAS 145

SFAS No. 145 amends other existing authoritative pronouncements to make various
technical corrections, clarify meanings, or describe their applicability under
changed conditions. The implementation of this standard did not have an effect
on the Company's financial position, results of operations or cash flows.

SFAS 146

SFAS No. 146 addresses financial accounting and reporting for costs associated
with exit or disposal activities and nullifies Emerging Issues Task Force (EITF)
Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." The Company plans to adopt this statement on January 1, 2003.
The Company does not expect the implementation of this statement to have an
effect on its financial position, results of operations or cash flows.

SFAS 147

SFAS No. 147 removes acquisitions of financial institutions from the scope of
both Statement 72 and Interpretation 9 and requires that those transactions be
accounted for in accordance with FASB Statements No. 141, Business Combinations,
and No. 142, Goodwill and Other Intangible Assets. In addition, this Statement
amends FASB Statement No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, to include in its scope long-term customer-relationship
intangible assets of financial institutions such as depositor- and
borrower-relationship intangible assets and credit cardholder intangible assets.
Consequently, those intangible assets are subject to the same undiscounted cash
flow recoverability test and impairment loss recognition and measurement
provisions that Statement 144 requires for other long-lived assets that are held
and used. The Company does not expect the implementation of this statement to
have an effect on its financial position, results of operations or cash flows.

8. Ohio Plant Closure:

On June 5, 2002, the Company announced the closure of its manufacturing facility
in Carroll, Ohio ("the Ohio Plant") after evaluating all aspects of the closure,
including operational and economic considerations. Closure costs recorded during
the second quarter of 2002 were $665,000, including accrued severance
compensation of $570,000 for 50 Ohio Plant employees. During the third quarter
of 2002, the Company paid $71,000 in severance to its Ohio Plant employees. As
of October 31, 2002 all production in Ohio has been transitioned to a contract
manufacturer.


                                       22
<PAGE>

                          ULTRAK INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

                                   (UNAUDITED)

9. Line of Credit:

On April 22, 2002, the Company received funding on a new three-year, $15 million
credit facility with Frost Capital and has paid off all indebtedness to its
previous lenders. Interest rates on this facility are calculated at prime plus
0.75%. The credit facility contains restrictive operational and financial
covenants and conditions, including tangible net worth and net income targets.
The facility also permits the Company's international subsidiaries to secure
localized lines of credit to pursue growth opportunities in individual
countries.

10. Asset Sale:

On August 8, 2002, the Company and Honeywell International, Inc. ("Honeywell")
entered into an Asset Purchase Agreement pursuant to which the Company agreed to
sell to Honeywell the assets and liabilities related to the closed-circuit
television ("CCTV") professional security business. Honeywell will purchase all
CCTV business-related receivables, inventories, personal properties, prepaid
expenses, deposits, other current assets, intellectual properties, contracts
(including CCTV business-related real estate leases), arrangements, licenses,
customer lists, vendor lists, files and documents (including credit
information), accounting records, inventory records, sales data, sales
promotional data, advertising materials, marketing materials, manufacturing
materials, cost and pricing information, business plans, reference catalogs, and
any other such CCTV-related data and records. Of our employees working in the
CCTV business, approximately 270 are planned to be transferred to Honeywell,
including 150 of our international personnel except those in Switzerland and
approximately 120 of our United States employees (out of a total of 350 United
States employees).

As part of the proposed Asset Sale, Honeywell will assume all liabilities
arising after the closing (other than liabilities which will be retained by us
as set forth in the Asset Purchase Agreement) related to the ownership, use,
possession, or condition of the Purchased Assets. The liabilities that will be
retained by us are those that arise from or relate to the conduct of the
Business or ownership of the Purchased Assets prior to the closing and include,
but are not limited to, liabilities for design defect; product liability or
product warranty; employee benefit plans and contracts; taxes; environment laws;
laws relating to the ownership, use, or possession of the Purchased Assets;
litigation; intercompany payables; infringement of intellectual property rights;
and indebtedness for borrowed money.

Under the terms of the Asset Purchase Agreement, Honeywell has agreed to pay
$36.0 million in cash, plus the assumption of trade liabilities. Honeywell will
pay $30.6 million at closing and the remaining $5.4 million in three
installments over an 18-month period.

After the closing, in addition to the purchase price payment in cash and
receivables, the Company will retain its tax assets in the form of net operating
loss carry-forwards, all of its international legal entities, its real estate
assets in Carroll, Ohio and Lewisville, Texas and the majority of its
intellectual properties in various technologies, licenses and trademarks.

The Asset Sale is subject to Ultrak shareholder approval and is expected to
close in the fourth quarter of 2002.

11. Income Taxes

The Company's effective income differs from the Federal Statutory rate for all
periods presented primarily due to income tax expense in certain Foreign
jurisdictions offset by net operating losses for which no benefit has been
provided.


                                       23
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                                  OF OPERATIONS

Results of Operations (Consolidated)

For the Three Months Ended September 30, 2002 compared to the Three Months ended
September 30, 2001

Net sales decreased $3.4 million (8%) over the same period in 2001. This decline
was mainly due to the loss of the Sam's Club Warehouse business in October 2001
($3.6 million) and the sale of the French CCTV and audio businesses in December
2001 ($1.1 million), offset by an increase in the U.S. CCTV business ($1.4
million).

Gross profit margins in the third quarter of 2002 were 34.1%, compared to 29.1%
in the third quarter of 2001. The continued improvement can be attributed to new
products, better pricing control and a more favorable customer mix. The closing
of the Ohio Plant is expected to increase gross margins in future periods.

Selling, general and administrative expenses increased $1.0 million (9%) over
the same period in 2001. This increase was attributed to $0.3 million in
personnel expenses for the new Chief Executive Officer and the Chief Operating
Officer, and $0.2 million in additional legal and board of directors' costs.
Expenses in the third quarter of 2001 included a $0.4 million credit in closure
costs related to an increase in the amount of proceeds received for the sale of
building in Antwerp, Belgium and a $0.1 million credit against bad debt expense.

Depreciation and amortization expenses decreased of $0.6 million (41%) compared
to the third quarter of 2001. This reduction stems from the Company's adoption
of SFAS 142, Goodwill and Intangible Assets, which suspended goodwill
amortization as of January 1, 2002.

Other expenses in the third quarter of 2002 were $1.0 million, compared to $0.4
million of other income in the third quarter of 2001. This other income includes
$1.2 million in gain from the sale of the Industrial Furnace Camera division in
July 2001. Excluding the effect of the Industrial Furnace Camera sale and $0.7
million in costs incurred for the sale of the CCTV business to Honeywell in
2002, there was a reduction in other expenses during the third quarter of 2002.
This reduction included $0.2 million of lower interest costs due to reduced
borrowing levels.

                                       24
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                                  OF OPERATIONS

Results of Operations (Consolidated)

For the Nine Months Ended September 30, 2002 compared to the Nine Months ended
September 30, 2001

Net sales decreased $17.0 million (14%) over the same period in 2001. This
decline resulted from the loss of the Sam's business in October 2001 ($13.3
million) and the sale of the French CCTV and audio businesses in December 2001
($3.8 million), offset by an increase in the U.S. CCTV business ($0.2 million).

Gross profit margins were 33.4%, compared to 30.9% during the same period in
2001. The gross profit in 2002 included a $0.5 million inventory write-down at
the Company's South African subsidiary and a $0.3 million royalty expense
incurred through an unfavorable patent settlement. The continued improvement can
be attributed to new products, better pricing control and a more favorable
customer mix. The closing of the Ohio Plant is expected to increase gross
margins in future periods.

Selling, general and administrative expenses increased $1.7 million (5%) over
the same period in 2001. This increase was attributed to $0.4 million severance
for the former Chief Operating Officer, the VP of Marketing and other managers
terminated in 2002, $0.7 million relating to severance and closure costs at the
Company's Ohio plant, $0.5 million in personnel costs for the new Chief
Executive Officer and the Chief Operating Officer, $0.3 million in additional
director costs and in legal and consulting expenses. Expenses in 2001 included a
$0.4 million credit in closure costs related to an increase in the amount of
proceeds received for the sale of building in Antwerp, Belgium and a $0.3
million credit against bad debt expense. These increases were offset by a $1.2
million reduction in European central management costs.

Depreciation and amortization expenses decreased of $1.4 million (36%) compared
to the same period in 2001. This reduction is due to the Company's adoption of
SFAS 142, Goodwill and Intangible Assets, which suspended goodwill amortization
as of January 1, 2002. The adoption of SFAS 142 is considered a change in
accounting principal and the cumulative effect of adopting this standard
resulted in a $26.1 million, or $1.87 per share (basic and diluted), non-cash
charge effective January 1, 2002.

Other expenses for the nine months ended September 30, 2002 were $2.1 million,
compared to other income of $6.4 million for the nine months ended September 30,
2001. The other income in 2001 included a $7.7 million gain from the sale of the
Company's investment in the shares of Detection Systems, Inc. and $1.2 million
in gain from the sale of the Industrial Furnace Camera division. Excluding the
effect of these sales and $0.7 million in costs incurred for the sale of the
CCTV business to Honeywell in 2002, there was a reduction in other expenses in
2002. This reduction included $0.4 million of lower interest costs due to
reduced borrowing levels and more favorable financing terms, $0.4 million in
income from successful patent enforcement and $0.2 million in foreign currency
gains.


                                       25
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                                  OF OPERATIONS

Results of Operations (US-PSG)

<Table>
<Caption>
                                                    Three months ended September 30,            Nine months ended September 30,
                                             -----------------------------------------    -----------------------------------------
                                               2002       2001     $ Change   % Change      2002       2001     $ Change   % Change
                                             --------   --------   --------   --------    --------   --------   --------   --------
<S>                                          <C>        <C>         <C>           <C>     <C>        <C>         <C>           <C>
Total revenue                                  19,915     17,285      2,630         15%     63,432     56,278      7,154         13%
Intersegment revenue                             (153)      (113)       (40)        35%     (3,836)      (306)    (3,530)      1154%
Revenue from external customers                19,762     17,172      2,590         15%     59,596     55,972      3,624          6%

Gross profit                                    7,694      5,558      2,136         38%     22,651     18,270      4,381         24%
Gross profit %                                     39%        32%         7%        20%         38%        33%         5%        16%

Selling, general and administrative expense     3,021      3,223       (202)        -6%      9,030     10,490     (1,460)       -14%
Depreciation and amortization expense              61        311       (250)       -80%        214        948       (734)       -77%
Operating profit                                4,612      2,024      2,588        128%     13,407      6,832      6,575         96%
</Table>

For the Three Months Ended September 30, 2002 compared to the Three Months ended
September 30, 2001

Net sales increases of $2.6 million were due to greater demand from a single,
large-end user.

Gross profit margin increased in the third quarter of 2002 due to new products,
better pricing control and a more favorable customer mix. and a reduced volume
of sales discounts.

Selling, general and administrative expenses in the third quarter of 2002
decreased $0.2 million from the comparable period a year ago. Lower personnel
costs were the main reason for the decrease.

For the Nine Months Ended September 30, 2002 compared to the Nine Months ended
September 30, 2001

Net sales increases of $3.6 million were due to greater demand from a single,
large-end user.

Gross profit margin increased in 2002 due to new products, better pricing
control and a more favorable customer mix and a reduced volume of sales
discounts.

Selling, general and administrative expenses in 2002 decreased $1.5 million from
the comparable period a year ago. Lower personnel costs were the main reason for
the decrease. The nine months figure of 2001 included a $0.3 million credit
attributable to reimbursement for defective products and $0.5 million in
expenses related to the Industrial Furnace Camera business that was sold in July
2001.


                                       26
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                            OF OPERATIONS, CONTINUED

Results of Operations (US-DSG)

<Table>
<Caption>
                                                   Three months ended September 30,            Nine months ended September 30,
                                              ----------------------------------------   ------------------------------------------
                                                2002       2001    $ Change   % Change     2002      2001       $ Change   % Change
                                              --------   --------  --------   --------   --------    --------   --------   --------
<S>                                           <C>        <C>       <C>        <C>        <C>         <C>        <C>        <C>
Total revenue                                    7,359     11,815    (4,456)      -38%     19,631      35,244    (15,613)      -44%
Intersegment revenue                                (1)        --        (1)       --         (2)          --         (2)       --
Revenue from external customers                  7,358     11,815    (4,457)      -38%     19,629      35,244    (15,615)      -44%

Gross profit                                     1,959      2,831      (872)      -31%      4,691       9,244     (4,553)      -49%
Gross profit %                                      27%        24%        3%       11%         24%         26%        -2%       -9%

Selling, general and administrative expense        629        862      (233)      -27%      1,732       2,632       (900)      -34%
Depreciation and amortization expense               20         52       (32)      -62%         61         159        (98)      -62%
Operating profit (loss)                          1,310      1,917      (607)      -32%      2,898       6,453     (3,555)      -55%
</Table>

For the Three Months Ended September 30, 2002 compared to the Three Months ended
September 30, 2001

Net sales of retail and consumer products decreased $4.5 million due to the loss
of the Sam's Club business in October 2001 ($3.6 million) and a reduced demand
for industrial vision products ($0.9 million).

Gross profit margins increased due to a more favorable sales mix.

The $0.2 million decrease in the selling, general and administrative expenses
was due to reduced headcount in the current year.

For the Nine Months Ended September 30, 2002 compared to the Nine Months ended
September 30, 2001

Net sales of retail and consumer products decreased $15.6 million due to the
loss of the Sam's Club business in October 2001 ($13.3 million) and a reduced
demand for industrial vision products ($2.0 million). This decline was partially
offset by additional sales of mobile video products ($0.3 million) and increased
sales in the e-commerce business, SecurityandMore.com ($0.3 million).

Gross profit margins decreased due to a $0.3 million royalty expense incurred
through an unfavorable patent settlement in the second quarter of 2002. This
decrease was partially offset by a more favorable sales mix.

The decrease in the selling, general and administrative expenses was due to
reduced headcount in the current year and higher e-commerce costs a year ago.


                                       27
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                            OF OPERATIONS, CONTINUED

Results of Operations (International-PSG)

<Table>
<Caption>
                                                   Three months ended September 30,            Nine months ended September 30,
                                              -----------------------------------------   -----------------------------------------
                                                2002       2001     $ Change   % Change     2002       2001     $ Change   % Change
                                              --------   --------   --------   --------   --------   --------   --------   --------
<S>                                           <C>        <C>        <C>        <C>        <C>        <C>       <C>         <C>

Total revenue                                    9,617     11,936     (2,319)      -19%     28,813     44,665    (15,852)      -35%
Intersegment revenue                              (215)    (1,147)       932       -81%     (1,037)   (12,629)    11,592       -92%
Revenue from external customers                  9,402     10,789     (1,387)      -13%     27,776     32,036     (4,260)      -13%

Gross profit                                     3,199      3,604       (405)      -11%      9,136     10,577     (1,441)      -14%
Gross profit %                                      34%        33%         1%        2%         33%        33%         0%        0%

Selling, general and administrative expense      3,066      3,202       (136)       -4%      9,406      9,847       (441)       -4%
Depreciation and amortization expense               75        253       (178)      -70%        241        772       (531)      -69%
Operating profit (loss)                             58        149        (91)      -61%       (511)       (42)      (469)     1117%
</Table>

For the Three Months Ended September 30, 2002 compared to the Three Months ended
September 30, 2001

Net sales decreased $1.4 million primarily due to the $1.1 million loss of the
revenue from the French CCTV and audio businesses which were sold in December
2001.

Selling, general and administrative expenses decreased due to savings from the
closure of operations in France, Belgium and Asia ($0.6 million), offset by
increased expenses in Italy ($0.3 million) and the establishment of a sales and
administrative office in Zurich, Switzerland ($0.1 million).

For the Nine Months Ended September 30, 2002 compared to the Nine Months ended
September 30, 2001

Net sales decreased $4.3 million due primarily to the $3.8 million loss of the
revenue from the French CCTV and audio businesses which were sold in December
2001. There was also a $0.4 million decline in revenue of systems sales from the
Company's Swiss subsidiary.

Gross profit margin remained constant in 2002 despite an inventory write-down of
$0.5 million at the Company's South African subsidiary.

Selling, general and administrative expenses decreased due to savings from the
closure of operations in France, Belgium and Asia ($1.2 million), offset by
increased R&D expenses in Italy ($0.4 million) and the establishment of an
administrative office in Zurich, Switzerland ($0.1 million).


                                       28
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                            OF OPERATIONS, CONTINUED

Liquidity and Capital Resources

The Company experienced a positive cash flow from operations of $4.2 million for
the nine months ended September 30, 2002, as compared to a negative cash flow of
$2.1 million for the same period in 2001. The increase resulted primarily from
the receipt of a $6.5 million tax refund that resulted from the carry-back of
2001 losses to the 1996 and 1997 tax years. Increases in cash from receivables
resulted from an increase in sales to those customers with shorter payment
terms. These sales resulted in a more favorable mix of receivables and an
increase in the accounts receivable turnover. The increased cash flow from
operations was also affected by an increased stockpiling of inventory demanded
by Honeywell for the closure of the Ohio Plant and an increase in other assets
related to capitalized Honeywell deal costs and a receivable from LeeMAH for
inventories transferred from Ohio.

Net cash used in investing activities was $1.4 million for the nine months ended
September 30, 2002, versus $23.7 million of cash provided by investing
activities for the same period in 2001. The outflows in 2002 represented $1.2
million in capital purchases and $0.2 million for the final earnout for the
acquisition of Ultrak Poland. The cash inflow from investing activities in 2001
was primarily due to the sale of the Company's investment in the shares of
Detection Systems, Inc. and the sale of the Industrial Furnace Camera division.

Net cash used in financing activities was $3.4 million for the nine months ended
September 30, 2002, compared to $22.7 million during the same period in 2001.
The most significant differences resulted from $17.5 million of net repayments
on the Company's revolving line of credit and repayments of $4.1 million on the
mortgage for the Company's Headquarters Facility in 2001. Net repayments on the
Company's revolving line of credit were $2.7 million in 2002.

On April 16, 2002, the Company received a federal income tax refund of $6.5
million due to the Job Creation and Worker Assistance Act of 2002. This statute
allows the Company to carry-back its 2001 net operating losses to the 1996 and
1997 tax years, permitting a refund of federal income taxes paid for those
years. The act extended the carry-back period on net operating losses to five
years from two years for losses arising in tax years ended in 2001 and 2002.

On April 22, 2002, the Company received funding on a new three-year, $15.0
million credit facility (the "Loan Agreement") with Frost Capital ("Frost") and
paid off all indebtedness to its previous lenders. Interest rates on this
facility are calculated at prime plus 0.75%. The facility contains certain
restrictive operational and financial covenants and conditions, including
tangible net worth and net income targets. As of September 30, 2002, the Company
had $12.3 million outstanding under its credit facility.

On August 8, 2002, the Company agreed to sell assets and certain liabilities
related to the Company's closed-circuit television business in the United
States, Germany, Italy, Poland, South Africa, Australia, Singapore and the
United Kingdom to Honeywell International Inc. for $36 million in cash, plus the
assumption of trade liabilities. Honeywell will pay $30.6 million at closing and
the remaining $5.4 million in three installments over an 18-month period. The
proposed transaction with Honeywell, if approved, will greatly improve the
Company's working capital and its ability to make capital purchases and
strategic acquisitions. The Honeywell Asset Sale is subject to Ultrak
shareholder approval and is expected to close in the fourth quarter of 2002.

On October 29, 2002, Frost notified the Company that the terms of the Loan
Agreement had been modified to increase the single account limit from 25% to
35%. This change will provide approximately $1.2 million in additional
availability until the close of the Honeywell Asset Sale.


                                       29
<PAGE>


                          ULTRAK INC. AND SUBSIDIARIES

     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                            OF OPERATIONS, CONTINUED

Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to market risk from changes in foreign currency exchange
rates and interest rates, which could affect its future results of operations
and financial condition. The Company manages its exposure to these risks through
its regular operating and financing activities. There have been no material
changes in market risk since December 31, 2001.

The Company holds debt with variable interest rates that exposes it to the risk
of increased interest costs if interest rates rise. To reduce the risk related
to unfavorable interest rate movements, the Company has an interest swap
agreement that expires in 2004. The agreement provides for a fixed rate of
6.485% on $5.0 million. This agreement added $0.1 million to interest expense
for the three and nine months ended September 30, 2002.

Controls and Procedures

An evaluation was performed under the supervision and with the participation of
our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures within 90 days before the filing of this quarterly
report. Based on that evaluation, our management, including our Chief Executive
Officer and our Chief Financial Officer, concluded that our disclosure controls
and procedures were effective. There have been no significant changes in our
internal controls or in other factors that could significantly affect internal
controls subsequent to their evaluation.


FORWARD LOOKING STATEMENTS

CERTAIN STATEMENTS CONTAINED OR INCORPORATED IN THIS QUARTERLY REPORT ON FORM
10-Q, WHICH ARE NOT STATEMENTS OF HISTORICAL FACT CONSTITUTE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995 (THE "REFORM ACT"). FORWARD LOOKING STATEMENTS ARE MADE IN GOOD FAITH BY
ULTRAK, INC. PURSUANT TO THE "SAFE HARBOR" PROVISIONS OF THE REFORM ACT. FORWARD
LOOKING STATEMENTS MAY INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER
FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF
ULTRAK, INC. TO DIFFER MATERIALLY FROM ANY FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS, INCLUDING
THE TIMELY DEVELOPMENT AND ACCEPTANCE OF NEW PRODUCTS, THE IMPACT OF COMPETITIVE
PRODUCTS AND PRICING, FLUCTUATIONS IN OPERATING RESULTS, ABILITY TO INTRODUCE
NEW PRODUCTS, TECHNOLOGICAL CHANGES, RELIANCE ON INTELLECTUAL PROPERTY AND OTHER
RISKS. MOREOVER, THE OBJECTIVES AND INTENTIONS SET FORTH IN THIS FORM 10-Q ARE
SUBJECT TO CHANGE DUE TO DOMESTIC, GLOBAL MARKET AND ECONOMIC CONDITIONS BEYOND
THE CONTROL OF ULTRAK, INC.


                                       30
<PAGE>


                          ULTRAK, INC. AND SUBSIDIARIES

                        QUARTER ENDED SEPTEMBER 30, 2002


Part II: Other Information

       Item 1.   Legal Proceedings

                  Not Applicable

       Item 2.   Changes in Securities

                  Not Applicable

       Item 3.   Defaults Upon Senior Securities

                  Not Applicable

       Item 4.   Submission of Matters to a Vote of Security Holders

                  Not Applicable

       Item 5.   Other Information

                  Not Applicable



                                       31
<PAGE>

                          ULTRAK, INC. AND SUBSIDIARIES

                        QUARTER ENDED SEPTEMBER 30, 2002

Item 6. Exhibits and Reports on Form 8-K

         (a)      A Form 8-K was filed with the Securities and Exchange
                  Commission on August 16, 2002 to announce the election of
                  Oliver M. Stahel to the Board of Directors, the resignations
                  of George K. Broady and Alastair J.A.B. Gunning from the Board
                  of Directors and the promotion of Karen S. Austin, the
                  Company's General Counsel, to Senior Vice-President.

         (b)      Exhibit 3.5 - Amendment to By-Laws of Ultrak, Inc.

         (c)      Exhibit 99.1 - Certification of Principal Executive Officer
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.

         (d)      Exhibit 99.2 - Certification of Principal Financial Officer
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.



                                       32
<PAGE>


                          ULTRAK, INC. AND SUBSIDIARIES

                                   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.


                                ULTRAK, INC.


Date: November 19, 2002         By: /s/ Chris Sharng
                                    --------------------------------------------
                                    Chris Sharng
                                    Senior Vice President-Finance, Secretary,
                                    Treasurer and Chief Financial Officer
                                    (Principal Financial and Accounting Officer)








                                       33
<PAGE>


          CERTIFICATION PURSUANT TO 18 U.S.C. 1350, AS ADOPTED PURSUANT
                TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Niklaus F. Zenger, certify that:

     1.   I have reviewed this quarterly report on Form 10-Q of Ultrak, Inc. for
          the period ended September 30, 2002;

     2.   Based on my knowledge, this quarterly report does not contain any
          untrue statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this quarterly report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this quarterly report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and we have:

          a.   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               quarterly report is being prepared;

          b.   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c.   presented in this quarterly report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent function):

          a.   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b.   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weakness.

          /s/ Niklaus F. Zenger
          -------------------------------------------------
          Niklaus F. Zenger
          Chairman of the Board and Chief Executive Officer
          November 19, 2002



                                       34
<PAGE>

          CERTIFICATION PURSUANT TO 18 U.S.C. 1350, AS ADOPTED PURSUANT
                TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Chris Sharng, certify that:

     1.   I have reviewed this quarterly report on Form 10-Q of Ultrak, Inc. for
          the period ended September 30, 2002;

     2.   Based on my knowledge, this quarterly report does not contain any
          untrue statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this quarterly report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this quarterly report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and we have:

          a.   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               quarterly report is being prepared;

          b.   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c.   presented in this quarterly report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent function):

          a.   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b.   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weakness.

          /s/ Chris Sharng
          --------------------------------
          Chris Sharng
          Chief Financial Officer
          November 19, 2002



                                       35

<PAGE>

                                INDEX TO EXHIBITS

<Table>
<Caption>
EXHIBIT
NUMBER            DESCRIPTION
-------           -----------
<S>              <C>

   (a)            A Form 8-K was filed with the Securities and Exchange
                  Commission on August 16, 2002 to announce the election of
                  Oliver M. Stahel to the Board of Directors, the resignations
                  of George K. Broady and Alastair J.A.B. Gunning from the Board
                  of Directors and the promotion of Karen S. Austin, the
                  Company's General Counsel, to Senior Vice-President.

   (b)            Exhibit 3.5 - Amendment to By-Laws of Ultrak, Inc.

   (c)            Exhibit 99.1 - Certification of Principal Executive Officer
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.

   (d)            Exhibit 99.2 - Certification of Principal Financial Officer
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.
</Table>