<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
- ---- OF 1934
For the quarterly period ended May 3l, l995
----------------------------------
or
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934
For the transition period from _______________ to ________________
Commission File Number 2-74238-B
---------
LOJACK CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2664794
- --------------------------------------------------------------------------------
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification Number
333 Elm Street Dedham, Massachusetts 02026
- --------------------------------------------------------------------------------
(Address of principal executive offices) (ZIP Code)
6l7-326-4700
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
________________________________________________________________________________
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during
the preceding l2 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 ____
----
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections l2, l3 or l5(d) of the Securities
Exchange Act of l934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes ____ No ____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the lastest practicable date.
21,432,510 at July 10, 1995
---------------------------
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Part I. Financial Information Page
----
<S> <C>
Consolidated Balance Sheets,
May 3l, l995 and February 28,
l995..............................................................1
Consolidated Statements of Operations:
Three Months Ended May 3l, l995 and 1994.........................2
Consolidated Statements of Cash Flows:
Three Months Ended May 3l, l995 and l994.........................3
Notes to Consolidated Financial
Statements.......................................................5
Management's Discussion and Analysis of Results
of Operations and Financial Condition.............................6
Part II. Other Information.................................................9
Signatures.......................................................10
Exhibit 11.......................................................11
</TABLE>
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
May 31, February 28,
l995 l995
---------- --------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents.......................$23,950,805 $21,665,908
Accounts receivable-net.................... 4,90l,27l 4,258,555
Inventories................................ l,346,63l l,845,753
Prepaid expenses and other assets.......... 76,344 63,97l
---------- ----------
Total current assets................... 30,275,05l 27,834,187
PROPERTY AND EQUIPMENT - NET.................. 8,56l,0ll 8,440,427
OTHER ASSETS-NET.............................. 403,630 420,202
---------- ----------
Total................................. $39,239,692 $36,694,8l6
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of capital
obligations .............................$ 66l,221 $ 65l,854
Accounts payable........................... 3,0l3,476 2,548,8ll
Accrued compensation ...................... 576,182 709,069
Current portion of deferred revenue........ 475,700 437,778
Deposits in escrow......................... 554,l87 7l8,668
Accrued and other liabilities.............. 889,002 800,260
--------- ---------
Total Current Liabilities............... 6,l69,768 5,866,440
--------- ---------
DEFERRED REVENUE.............................. l,338,5l0 l,l64,4ll
--------- ---------
LONG TERM DEBT:
Capital lease obligations................. l,0l3,509 799,246
l0% convertible subordinated
debentures............................... l00,000 l00,000
---------- ----------
Total long-term debt................. l,ll3,509 899,246
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock - $.01 par value; authorized,
35,000,000 shares; issued, 21,352,310
and 21,252,6l0 shares at May 3l, l995
and February 28, l995, respectively...... 213,524 212,527
Additional paid-in capital................ 53,277,820 53,046,4l6
Deficit................................... (22,873,439) (24,494,224)
---------- ----------
Total stockholders' equity................ 30,6l7,905 28,764,7l9
----------- ----------
Total................................ $39,239,692 $36,694,8l6
========== ==========
</TABLE>
See notes to consolidated financial statements
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
------------------
May 3l, May 3l,
1995 l994
---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C>
Revenues...................................$ll,832,738 $8,936,722
Cost of Goods Sold......................... 5,633,024 4,764,l34
---------- ---------
Gross Margin............................... 6,l99,7l4 4,l72,588
---------- ---------
Costs and Expenses:
System costs and research and
development............................ 324,343 126,345
Sales and marketing..................... 2,652,745 2,l74,593
General and administrative.............. l,274,753 l,0l3,873
Depreciation and amortization........... 472,987 526,041
--------- ---------
Total................................ 4,724,828 3,840,852
--------- ---------
Operating Income .......................... l,474,886 33l,736
--------- ---------
Other Income (Expense):
Interest Income............................ 338,525 104,966
Interest Expense .......................... ( 32,626) (l94,603)
--------- ---------
Total...................................... 305,899 ( 89,637)
--------- ---------
Income before Provision
for Income Taxes......................... l,780,785 242,099
Provision for Income Taxes................. l60,000 13,956
--------- -------
Net Income ................................$ l,620,785 $ 228,l43
--------- -------
Cumulative undeclared preferred
dividends for the period................. 0 (304,l25)
--------- -------
Net Income (Loss) Applicable to
Common Stockholders.......................$ l,620,785 $ (75,982)
========= ======
Earnings per Share:
Net income ................................ $0.07 $0.00
===== ======
</TABLE>
See notes to consolidated financial statements.
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
------------------
May 31, May 31,
l995 l994
--------- ------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................... $ l,620,785 $ 228,l43
---------- ---------
Adjustments to reconcile net income
to net cash provided by (used for)
operating activities:
Depreciation and amortization.......... 666,557 627,28l
Increase (decrease) in cash from
changes in assets and liabilities:
Accounts receivable-net............ (642,7l6) (737,398)
Inventories........................ 499,l22 (l5l,523)
Prepaid expenses and other assets.. (12,373) 4,634
Other assets....................... 849 (6,6l9)
Accounts payable................... 464,665 (403,3l4)
Accrued and other
liabilities. .................... 3,395 (l2l,493)
------- ---------
Total adjustments................ 979,499 (788,432)
------- -------
Net cash provided by (used for)
operating activities............ $ 2,600,284 $ (560,289)
---------- -------
</TABLE>
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
<TABLE>
<CAPTION>
Three Months Ended
------------------
May 3l, May 3l,
l995 l994
------ ------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and
equipment - net........................$( 433,8l7) $(l,092,2l9)
--------- ---------
Net cash used for investing
activities....................... ( 433,8l7) (l,092,219)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock................ 232,40l 13,378,52l
Repayment of debt....................... (113,97l) (143,760)
------- -------
Net cash provided by
financing activities............. ll8,430 l3,234,76l
--------- ----------
INCREASE IN CASH AND
EQUIVALENTS............................. 2,284,897 ll,582,253
BEGINNING CASH AND EQUIVALENTS........... 21,665,908 8,4l6,528
---------- ---------
ENDING CASH AND EQUIVALENTS............. $ 23,950,805 $l9,998,78l
========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements and notes do not include
all of the disclosures made in the Company's Annual Report to Stockholders,
which should be read in conjunction with these statements. Certain fiscal
1995 amounts have been reclassified to conform with the fiscal 1996
presentation. In the opinion of the Company, the statements include all
adjustments necessary for a fair presentation of the quarterly results and
any and all such adjustments were of a normal recurring nature.
2. The results of operations for the three months ended May 3l, l995 and l994
are not necessarily indicative of the results to be expected for the full
year.
3. Supplemental cash flow information:
Cash paid for interest for the three months ended May 3l, l995 and l994 was
$35,126 and $6ll,864, respectively. Cash paid for income taxes for the
three months ended May 3l, l995 and l994 was $49,000 and $25,000,
respectively.
4. Earnings per share
Earnings per share has been computed by dividing net earnings, after
reduction for preferred stock dividends (when applicable), by the weighted
average number of common shares and equivalents outstanding. Common share
equivalents included in the computation represent shares issuable upon
assumed exercise of stock options and stock purchase warrants (when
applicable), which would have a dilutive effect in periods where there are
earnings.
The number of common shares and equivalents for computing primary earnings
per share for the three months ended May 3l, l995 and l994 were 22,880,828
and l6,208,9l6, respectively. Fully diluted and primary earnings per share
were the same for the three months ended May 3l, l995 and l994.
5. Income Taxes
The Company has available a net operating loss carryforward of $l9,200,000
at May 3l, l995. SFAS l09 provides that a deferred tax asset should be
recognized if it is "more likely that not" that the Company will realize
the tax benefit of such carryforwards. The Company is presently evaluating
its current tax provision in light of this criterion, current results of
operations, and expectations of future operating results. If appropriate,
the Company may either reduce its provision for income taxes or provide a
net tax benefit in future quarters in order to record such a deferred
asset.
<PAGE>
Management's Discussion and Analysis
of Results of Operations and Financial Condition
Revenues increased by $2,896,000 to $11,833,000 for the three months ended May
31, 1995 from $8,937,000 for the same period a year earlier. This increase is
primarily the result of increased revenues of $2,992,000 from sales of LoJack
Units and related products in the Company's domestic markets. Revenues from
international licensing activities decreased by $96,000 primarily due to a
decrease in revenues from product sales and royalties of $308,500 offset by an
increase in non-recurring license fees of $212,500. Revenues from product sales
and royalties from international markets are subject to fluctuation on a quarter
to quarter basis.
Cost of goods sold as a percentage of revenues decreased to 48% of related
revenues for the three months ended May 31, 1995 from 53% a year earlier. Cost
of goods sold related to domestic revenues decreased for the three months ended
May 31, 1995 to 49% of revenues from 53% for the same period a year earlier.
This decrease is primarily the result of reduced manufacturing costs of the
LoJack Unit as well as increased installation efficiencies resulting from
economies of scale. International cost of goods sold as a percentage of revenues
decreased to 24% of related revenues for the three months ended May 31, 1995
from 62% for the same period a year earlier. This was the result of the change
in the international revenue mix to primarily license fees and royalties during
the three months ended May 31, 1995 which have a much higher margin than the
product and component sales which made up a significant portion of the revenues
for the same period a year earlier.
Systems costs and research and development increased by $198,000 to $324,000 for
the three months ended May 31, 1995 from $126,000 for the same period a year
earlier. This increase is primarily related to increased research and
development expenses related to several projects undertaken during the latter
part of fiscal 1995 related to the LoJack System and related products as well as
increased systems costs related to the expansion to new domestic markets during
the second quarter of fiscal 1995 and the first quarter of fiscal 1996.
Overall, marketing and general and administrative expenses decreased as a
percentage of revenues to 22.4% and 10.8%, respectively, for the three months
ended May 31, 1995 from 24.3% and 11.4%, respectively, for the same period a
year earlier.
<PAGE>
Marketing expenses increased by $478,000 to $2,653,000 for the three months
ended May 31, 1995 from $2,175,000 for the same period a year earlier. This
increase is attributed to increases in marketing wages and benefits of $232,000
primarily related to the expansion into the additional jurisdictions ("New
Markets") of New York and Rhode Island in June of 1994 and Connecticut in March
of 1995.The additional increase of $257,000 is primarily related to advertising
and promotional expenses related to both the expansion to New Markets and to
support increased revenues in its existing domestic markets.
General and administrative expenses increased by $261,000 to $1,275,000 for the
three months ended May 31, 1995 from $1,014,000 for the same period a year
earlier. This increase is primarily related to wages and benefits and other
support services related to the increase in revenues and expansion to the New
Markets.
Depreciation and amortization decreased by $53,000 to $473,000 for the three
months ended May 31, 1995 from $526,000 for the same period a year earlier. This
decrease results from a significant amount of property and equipment related to
LoJack Systems in several markets becoming fully depreciated during fiscal 1996
offset by an increase in depreciation on property and equipment placed in
service in the New Markets in fiscal 1995 and 1996.
Interest income increased by $234,000 to $339,000 for the three months ended May
31, 1995 from $105,000 for the same period a year earlier. This increase results
from the increase in cash available for investment and an increase in interest
rates during the three months ended May 31, 1995 as compared to the same period
a year earlier.
Interest expense decreased by $162,000 to $33,000 for the three months ended May
31, 1995 from $195,000 for the same period a year earlier. This decrease is
primarily the result of the absence of interest expense in the three months
ended May 31, 1995 related to a third party guarantee under a former line of
credit.
Provision for income taxes increased by $146,000 to $160,000 for the three
months ended May 31, 1995 from $14,000 for the same period a year earlier as a
result of the increase in the Company's taxable income during the period.
As a result of the foregoing, net income increased by $1,393,000 to $1,621,000
for the three months ended May 31, 1995 from $228,000 for the same period a year
earlier.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
As of May 31, 1995, the Company had working capital of $24,105,000 and an unused
line of credit of $4,500,000. During the remainder of fiscal 1996 the Company
plans to complete its expansion to San Diego and Orange counties and Connecticut
which began during the first quarter of fiscal 1996. The Company is also
currently in negotiations with respect to possible expansion in several other
domestic jurisdictions. Capital expenditures related to those expansions as well
as capital requirements for the Company's existing operations are budgeted at
$2,500,000 for the remainder of the fiscal year.
The Company continues to investigate possible investment opportunities utilizing
current resources including, but not limited to, possible acquisitions of or
investments in other companies in the security industry or repurchase of common
shares of the Company. To date, the Company has taken no formal action in this
regard.
<PAGE>
PART II - OTHER INFORMATION
Item l. Not Applicable
Item 2. Not Applicable
Item 3. Not Applicable
Item 4. Not Applicable
Item 5. Not Applicable
Item 6a. 11. Statement Regarding Computation of Per Share Earnings.
b. No reports on Form 8-K were filed during the quarter for which this
report is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LOJACK CORPORATION
July , l995 /s/ C. Michael Daley
- ------------------------- --------------------
Date C. Michael Daley
President and Treasurer
(Chief Executive Officer)
July , l995 /s/ Joseph F. Abely
- ------------------------- -------------------
Date Joseph F. Abely
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
STATEMENT REGARDING COMPUTATION OF
PER SHARE EARNINGS
EXHIBIT 11
<TABLE>
<CAPTION>
Three Months Ended
------------------
May 3l, May 3l,
1995 1994
---- ----
<S> <C> <C>
Primary:
Earnings:
Net Income $ l,620,785 $ 228,l43
Deduct preferred dividends (304,125)
---------- -------
Income (Loss) applicable to common
stock l,620,785 (75,982)
========= ======
Shares:
Weighted average number of common
shares outstanding 21,284,465 16,208,9l6
Assumed exercise of options
and warrants l,596,363
--------- ----------
Weighted average number of common
shares for primary calculation 22,880,828 16,208,9l6
========== ==========
Primary earnings per share:
Net income $0.07 $ 0.00
==== ====
</TABLE>
<PAGE>
STATEMENT REGARDING COMPUTATION OF
PER SHARE EARNINGS
EXHIBIT 11
(Continued)
<TABLE>
<CAPTION>
Three Months Ended
------------------
May 3l, May 3l,
1995 1994
---- ----
<S> <C> <C>
Assuming full dilution:
Earnings:
Net income $ l,620,785 $ 228,l43
Deduct preferred dividends (304,l25)
--------- -------
Income (Loss) applicable to common
stock l,620,785 (75,982)
========= ======
Shares:
Weighted average number of common
shares outstanding 21,284,465 l6,208,9l6
Assumed exercise of options and
warrants l,682,375
---------- ----------
Weighted average number of common
shares assuming full dilution 22,966,840 l6,208,9l6
========== ==========
Fully diluted earnings per share:
Net income $0.07 $ 0.00
==== ====
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> MAY-31-1995
<CASH> 23,950,805
<SECURITIES> 0
<RECEIVABLES> 5,151,046
<ALLOWANCES> 249,775
<INVENTORY> 1,346,631
<CURRENT-ASSETS> 30,275,051
<PP&E> 19,149,616
<DEPRECIATION> 10,588,605
<TOTAL-ASSETS> 39,239,692
<CURRENT-LIABILITIES> 6,169,768
<BONDS> 0
<COMMON> 213,524
0
0
<OTHER-SE> 30,404,381
<TOTAL-LIABILITY-AND-EQUITY> 39,239,692
<SALES> 11,545,405
<TOTAL-REVENUES> 11,832,738
<CGS> 5,633,024
<TOTAL-COSTS> 5,633,024
<OTHER-EXPENSES> 4,724,828
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,626
<INCOME-PRETAX> 1,780,785
<INCOME-TAX> 160,000
<INCOME-CONTINUING> 1,620,785
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,620,785
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
