<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 31, 1999
OR
___TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURTIES 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)
781-326-4700
(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___
---
APPLICABLE ONLY TO CORPORATE ISSUERS:
There were 16,847,781 shares issued and outstanding of $.01 par value,
common stock, as of July 12, 1999.
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets:
May 31, 1999 and February 28, 1999..................................................... 1
Consolidated Statements of Operations:
Three Months Ended May 31, 1999 and 1998............................................. 2
Consolidated Statements of Cash Flows:
Three Months Ended May 31, 1999 and 1998.............................................. 3
Notes to Consolidated Financial Statements.............................................. 4
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition................................................. 6
Item 3. Quantitative and Qualitative Disclosures about Market Risk........................ 10
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K................................................... 11
Signatures.............................................................................. 12
Exhibit 27.............................................................................. 13
</TABLE>
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION> MAY 31, FEBRUARY 28,
1999 1999
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents...................................... $ 6,577,874 $ 10,230,215
Accounts receivable - net................................. 10,846,550 9,679,102
Inventories............................................... 4,012,636 5,666,718
Prepaid expenses and other................................ 269,773 217,609
Prepaid income taxes...................................... 1,597,687 779,118
Deferred income taxes..................................... 823,599 796,237
-------------- --------------
Total current assets.................................... 24,128,119 27,368,999
MARKETABLE SECURITIES..................................... 1,529,585 999,232
PROPERTY AND EQUIPMENT - Net.............................. 9,367,545 9,873,105
OTHER ASSETS - Net........................................ 651,786 237,321
-------------- --------------
TOTAL..................................................... $ 35,677,035 $ 38,478,657
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of capital lease
obligations............................................. $ 1,218,302 $ 1,297,046
Accounts payable.......................................... 4,378,090 3,437,895
Accrued and other liabilities............................. 1,343,654 1,098,274
Deposits.................................................. 120,263 54,416
Current portion of deferred revenue...................... 1,502,480 1,516,875
Accrued compensation...................................... 984,421 1,229,970
-------------- --------------
Total current liabilities............................... 9,547,210 8,634,476
-------------- --------------
DEFERRED REVENUE.......................................... 3,161,466 3,113,683
-------------- --------------
DEFERRED INCOME TAXES..................................... 657,154 241,855
-------------- --------------
CAPITAL LEASE OBLIGATIONS................................. 1,098,280 1,372,760
-------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock - $.01 par value; authorized,
35,000,000 shares; issued, 22,468,381 and
22,399,381 shares at May 31, 1999 and
February 28, 1999, respectively......................... 224,684 223,994
Additional paid-in-capital................................ 60,533,722 60,329,803
Accumulated other comprehensive income.................... 558,838 235,323
Retained earnings......................................... 18,803,956 16,559,076
Treasury stock, at cost, 5,591,800
and 4,736,600 shares of common stock at
May 31, 1999 and February 28, 1999,
respectively.............................................. (58,908,275) (52,232,313)
-------------- --------------
Total stockholders' equity.............................. 21,212,925 25,115,883
-------------- --------------
TOTAL..................................................... $ 35,677,035 $ 38,478,657
============== ==============
</TABLE>
See notes to consolidated financial statements.
(1)
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
(Unaudited)
MAY 31, MAY 31,
1999 1998
<S> <C> <C>
Revenues............................................ $22,501,407 $20,264,538
Cost of goods sold.................................. 9,968,539 8,881,876
----------- -----------
Gross margin........................................ 12,532,868 11,382,662
----------- -----------
Costs and expenses:
Systems costs and research and
development........................................ 393,040 346,836
Marketing........................................... 5,868,216 4,182,349
General and administrative.......................... 2,240,592 2,088,345
Depreciation and amortization....................... 434,646 350,618
----------- -----------
Total.............................................. 8,936,494 6,968,148
----------- -----------
Operating income.................................... 3,596,374 4,414,514
----------- -----------
Other income (expense):
Interest income..................................... 114,906 93,197
Interest expense.................................... (56,741) (48,467)
Gain on sale of fixed assets........................ 24,341 47,359
Gain on sale of marketable securities - 1,099,597
----------- -----------
Total.............................................. 82,506 1,191,686
----------- -----------
Income before provision
for income taxes................................... 3,678,880 5,606,200
Provision for income taxes.......................... 1,434,000 2,187,000
----------- -----------
Net income.......................................... $ 2,244,880 $ 3,419,200
=========== ===========
Earnings per share:
Basic............................................... $ 0.13 $ 0.19
=========== ===========
Diluted............................................. $ 0.12 $ 0.17
=========== ===========
Weighted average shares:
Basic............................................... 17,385,108 18,171,258
=========== ===========
Diluted............................................. 18,157,695 19,674,361
=========== ===========
</TABLE>
See notes to consolidated financial statements.
(2)
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MAY 31, MAY 31,
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................................. $ 2,244,880 $ 3,419,200
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization....................................... 855,518 687,841
Provision for doubtful accounts..................................... 8,767 55,265
Deferred income taxes............................................... 181,099 (135,081)
Gain on sale of marketable securities............................... - (1,099,597)
Increase (decrease) in cash from changes in
assets and liabilities:
Accounts receivable............................................. (1,176,215) (1,811,805)
Inventories..................................................... 1,654,082 (172,752)
Prepaid expenses and other...................................... (52,164) (38,079)
Prepaid income taxes............................................ (818,569) -
Other assets.................................................... (425,000) -
Accounts payable................................................ 940,195 681,531
Accrued and other liabilities................................... 99,066 313,614
----------- -----------
Net cash provided by operating activities..................... 3,511,659 1,900,137
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and equipment................................. (339,423) (57,581)
Purchase of marketable securities...................................... - (1,259,170)
Proceeds from sale of marketable securities............................ - 1,745,310
----------- -----------
Net cash (used for) provided by investing activities............ (339,423) 428,559
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock................................................ 204,609 83,469
Repayment of capital lease obligations.................................. (353,224) (402,923)
Repurchase of common stock.............................................. (6,675,962) (2,080,000)
----------- -----------
Net cash used for financing activities.......................... (6,824,577) (2,399,454)
----------- -----------
DECREASE IN CASH AND EQUIVALENTS.......................................... (3,652,341) (70,758)
BEGINNING CASH AND EQUIVALENTS............................................ 10,230,215 5,498,348
----------- -----------
ENDING CASH AND EQUIVALENTS............................................... $ 6,577,874 $ 5,427,590
=========== ===========
</TABLE>
See notes to consolidated financial statements.
(3)
<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
1999 amounts have been reclassified to conform with the fiscal 2000
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 31, 1999 and 1998
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 31, 1999 and 1998 was
$57,000 and $48,000, respectively. Cash paid for income taxes for the three
months ended May 31, 1999 and 1998 was $2,003,000 and $2,137,500,
respectively. For the three months ended May 31, 1999 and 1998 the Company
incurred capital lease obligations of $0 and $1,149,000 respectively.
4. Earnings per share:
The Company computes earnings per share under the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share."
SFAS No. 128 requires the dual presentation of basic and diluted earnings
per share. Basic earnings per common share is computed using the weighted
average number of common shares outstanding during the period. Diluted
earnings per common share reflects the effect of the Company's outstanding
options (using the treasury stock method), except where such options would
be antidilutive.
A reconciliation of weighted average shares used for the basic and
diluted computations is as follows as of May 31:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Weighted average shares for basic 17,385,108 18,171,258
Dilutive effect of stock options 772,587 1,503,103
---------- ----------
Weighted average shares for diluted 18,157,695 19,674,361
========== ==========
</TABLE>
5. Marketable Securities:
In March 1998 the Company exercised an option to purchase 292,507 common
shares of its United Kingdom licensee, Tracker Network, UK Ltd. for an
aggregate exercise price of $1,259,000. In April 1998 the Company sold
150,000 of these shares and recognized a pre-tax gain of approximately
$1,100,000. The remaining 142,507 shares of the investment are classified
as an available-for-sale security in accordance with SFAS No. 115 in the
Company's Consolidated Balance Sheet with a fair value of approximately
$1,530,000 and $999,000 as of May 31, 1999 and February 28, 1999,
respectively. The unrealized gain of $324,000 (net of taxes of $207,000) is
reported in other comprehensive income, a component of stockholders'
equity, for the three months ended May 31, 1999.
In June 1999, the Company sold the remaining 142,507 shares and
recognized a pre-tax gain of approximately $900,000.
(4)
<PAGE>
6. Comprehensive Income:
Effective March 1, 1998, the Company adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income." Currently, in addition to net income
the only item which would be included in comprehensive income is unrealized
gains or losses on available-for-sale securities. For the three months
ended May 31, 1999 and 1998, comprehensive income totaled approximately
$2,568,000 and $4,299,000, respectively.
7. Segment Reporting:
Effective March 1, 1998, the Company adopted SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information". SFAS No. 131
requires disclosure of segmented information about the Company's operations
based upon how management oversees and evaluates the results of operations.
The Company has determined that it has two distinct reportable segments:
the domestic segment and the international segment. The Company considers
these two segments reportable as they are managed separately and the
operating results of each segment are regularly reviewed and evaluated
separately by the Company's senior management.
The following table presents information about the Company's operating
segments for the three months ended May 31, 1999 and 1998:
<TABLE>
<CAPTION>
International
Domestic Segment Segment Consolidated
------------------- ----------------- -------------------
<S> <C> <C> <C>
1998
----
Revenues:
Product sales $ 17,591,605 $ 2,204,374 $ 19,795,979
License fees and
system component revenues - 468,559 468,559
-------------- ------------ ---------------
Total revenues $ 17,591,605 $ 2,672,933 $ 20,264,538
============== ============ ===============
Segment net income $ 2,819,305 $ 599,895 $ 3,419,200
============== ============ ===============
1999
----
Revenues:
Product sales $ 20,655,035 $ 1,802,641 $ 22,457,676
License fees and
system component revenues - 43,731 43,731
-------------- ------------ ---------------
Total revenues $ 20,655,035 $ 1,846,372 $ 22,501,407
============== ============ ===============
Segment net income $ 1,947,453 $ 297,427 $ 2,244,880
============== ============ ===============
</TABLE>
(5)
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
Three months ended May 31, 1999 ("fiscal 2000")
versus three months ended May 31, 1998 ("fiscal 1999")
Revenues for the three months ended May 31, 1999 increased by $2,236,000 or 11%,
to $22,501,000 from $20,265,000 for the same period a year earlier. Domestic
revenues increased during the same period by $3,063,000, or 17% to $20,655,000
from $17,592,000 a year earlier. Revenues from product sales and licensing fees
related to international licensing agreements decreased by $827,000, or 31%, to
$1,846,000 for the three months ended May 31, 1999 from $2,673,000 for the same
period a year earlier.
The increase in domestic revenues was primarily due to an increase of 21% in the
number of LoJack Units sold in domestic markets. The decrease in international
revenues was partially related to a $425,000 decrease in revenues from the sale
of system components and license fees which are primarily related to new
licensees and are generally non-recurring in nature. The additional decrease of
$402,000 was related to lower sales of LoJack Units and related products to
existing licensees.
Cost of goods sold is 44% of revenues for the three months ended May 31, 1999
and 1998. Domestically cost of sales increased to 44% of related revenues from
43% for the same periods. International costs of sales increased to 51% of
related revenues for the three months ended May 31, 1999 from 50% a year earlier
which was principally the result of the decrease in non-recurring component
sales and license fees which generated higher margins than the sale of LoJack
Units.
Systems costs and research and development increased by $46,000 to $393,000 for
the three months ended May 31, 1999 from $347,000 for the same period a year
earlier. An increase in systems costs of $70,000 was partially offset by a
decrease of $24,000 in research and development expense.
Marketing expense increased by $1,686,000 to $5,868,000 for the three months
ended May 31, 1999 from $4,182,000 for the same period a year earlier. This
increase was primarily related to an increase in media expense of $980,000 due
to an aggressive multi-media advertising campaign for fiscal year 2000. The
additional increase of $706,000 was the result of an increase of $573,000 in
marketing salaries and benefits, and $133,000 increase in marketing supplies and
promotional expense related to market expansion, an increase in size and quality
of sales force, and an increase in overall business volume.
General and administrative expense increased by $153,000 to $2,241,000 for the
three months ended May 31, 1999 from $2,088,000 for the same period a year
earlier primarily as the result of increased payroll costs and administrative
expenses related to the increased domestic business volume and market
expansions, as well as increases in certain professional fees related to ongoing
business.
Depreciation and amortization increased by $84,000 to $435,000 for the three
months ended May 31, 1999 from $351,000 for the same period a year earlier,
primarily as the result of depreciation expense on LoJack System components in
new markets and depreciation expense on installation vehicles purchased during
the fiscal year ended February 28, 1999.
Interest income increased by $22,000 to $115,000 for the three months ended May
31, 1999 from $93,000 for the same period a year earlier primarily as the result
of an increase in the average cash balances available for investment during the
period, as compared with a year earlier.
Interest expense increased by $9,000 to $57,000 for the three months ended May
31, 1999 from $48,000 for the same period a year earlier as a result of interest
on additional capital leases of installation vehicles.
(6)
<PAGE>
Gain on sale of fixed assets decreased by $23,000 to $24,000 for the three
months ended May 31, 1999 from $47,000 for the same period a year earlier due to
a decrease in the number of fully depreciated installation vehicles sold during
the period in the normal course of business.
Gain on sale of marketable securities of $1,100,000 for the three months ended
May 31, 1998 was the result of the sale of common stock of the Company's United
Kingdom licensee which had been acquired through the exercise of an option in
the related license agreement.
The provision for income taxes decreased by $753,000 to $1,434,000 for the three
months ended May 31, 1999 from $2,187,000 for the same period a year earlier as
the result of the decrease in the Company's taxable income during the respective
periods. The Company's effective tax rate remained at 39% during both periods.
As a result of the foregoing, net income decreased by $1,174,000 to $2,245,000
for the three months ended May 31, 1999 from $3,419,000 for the same period a
year earlier.
Liquidity and Capital Resources
In the first three months of fiscal 2000 cash and equivalents decreased by
$3,652,000. Cash flow from operations was $3,512,000, cash flow used for
investing activities was $339,000 and cash flow used for financing purposes was
$6,825,000. Cash flow from operations included net income of $2,245,000, non-
cash additions to net income of $1,045,000, plus increases from changes in
assets and liabilities of $222,000. The increase in cash flow from changes in
assets and liabilities includes a decrease in inventories of $1,654,000 related
to increased domestic business volume and certain international shipments during
the first quarter of fiscal 2000. The increase in accounts payable of $940,000
is primarily related to the timing of payment to certain vendors including one
vendor related to multi-media advertising campaign. Increase in accrued and
other liabilities of $99,000 was the result of an increase in deferred revenue
related to sales of lifetime warranties. These increases in cash flow were
offset partially by an increase in accounts receivable of $1,176,000 which was
primarily related to the increase in domestic revenues during the first quarter
of fiscal 2000, an increase in prepaid income taxes of $819,000, an increase in
other assets of $425,000 for the purchase of a patent, and an increase in
prepaid expenses of $52,000 primarily due to prepayments on certain tower
leases.
Cash flows from investing activities included expenditures for property and
equipment for the three months ended May 31, 1999 of $339,000.
Cash flows used for financing activities included the repurchase of 855,200
shares of the Company's common stock during the three months ended May 31, 1999
for $6,676,000. Total cumulative common shares repurchased under the Company's
stock repurchase program were 5,591,800 shares as of May 31, 1999. The Company
intends to continue to repurchase shares of its common stock in open market
transactions, from time to time, depending upon the price of the stock. As of
May 31, 1999 there are 608,200 additional common shares authorized for
repurchase under the Company's existing repurchase program.
As of May 31, 1999 the Company had working capital of $14,581,000. The Company
believes that it can meet its anticipated capital and operating requirements for
the remainder of fiscal 2000 using existing working capital, cash flow from
operations, and if necessary, the Company's $7,500,000 line of credit, which
was unused as of May 31, 1999.
(7)
<PAGE>
The Company presently is pursuing expansion efforts in several additional
domestic jurisdictions. The Company expects that, pending receipt of necessary
governmental approvals, certain potential expansion markets may become
operational during fiscal 2000. The Company plans to fund these expansions as
well as other capital expenditures during fiscal 2000 using existing working
capital, cash flow from operations, and/or the line of credit. The Company
expects that it will spend approximately $2,100,000 on capital expenditures
(excluding assets purchased under capital lease agreements) during the remainder
of fiscal 2000.
The Company's expansion to additional international markets is achieved through
licensing agreements and has not in the past required capital investment on the
part of the Company.
The Company is also continuing to explore possible investment opportunities,
including, but not limited to, possible acquisitions of, or investments in,
other companies.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board released SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
establishes new standards of accounting and reporting for derivative instruments
and hedging activities. This statement requires that all derivatives be
recognized at fair value in the balance sheet, and that the corresponding gains
or losses be reported either in the statement of operations or as a component of
comprehensive income, depending on the type of hedging relationship that exists.
The statement will be effective for the Company in fiscal 2001. Management is
currently evaluating the effect of adopting SFAS No. 133 on the Company's
consolidated financial statements.
Year 2000 Compliance
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. Computer programs
and hardware that are date sensitive may recognize a date using "00" as the year
1900 rather than the year 2000. The products sold by the Company do not
contain internal date-sensitive components which would in any way effect their
operation on or beyond the date January 1, 2000.
The Year 2000 issue could cause some disruptions of internal operations,
including, among other things, a temporary inability to process transactions or
engage in normal business activities. The Company has focused its Year 2000
review in the following areas: (1) information technology ("IT") systems such as
hardware and software; (2) non-IT systems such as distribution and facility
equipment containing embedded microprocessors; and (3) the readiness of third-
parties such as suppliers and customers. An inventory of all IT and non-IT
systems has been taken and efforts are underway to insure that the appropriate
testing and remediation or replacement occurs. Virtually all of the Company's
critical accounting information systems have been tested for Year 2000
compliance. Many of the critical information systems were replaced with Year
2000 compliant programs in the normal course of business. The Company intends to
replace or upgrade non-compliant IT hardware and software systems by the end of
the third quarter of the calendar year. Preliminary testing of non-IT systems
and equipment indicates that many of these systems rely on time intervals rather
than dates in their operation. The company is satisfied to date with our
efforts regarding Year 2000 compliance.
(8)
<PAGE>
The Company has begun the implementation of hardware and software upgrades to
its law enforcement infrastructure, currently scheduled for completion by
September, 1999. Although the Company cannot provide absolute assurance, these
systems have been designed to prevent date field-related operation interruptions
and miscalculations. The Company is also working with the government agencies
in our areas of operation to attempt to ensure that the government systems that
communicate with the Company's law enforcement infrastructure are tested and
modified, if necessary. There can be no assurance, however, that government
agencies will address the Year 2000 issue in a timely manner. The Company will
continue to communicate with major suppliers and customers to determine the
extent to which the Company may be vulnerable if a supplier fails to correct
their own Year 2000 issue. Most suppliers and customers who have replied to our
inquiries indicated that they expect to be Year 2000 compliant on a timely
basis. There can be no assurance, however, that third parties will address the
Year 2000 issue in a timely manner. Based on its review to date, the Company
believes the Year 2000 problem will not pose significant internal operational
disruptions. Events beyond the Company's reasonable control could adversely
affect the Company's ability to deliver its products in a timely manner. These
events could include failure of infrastructure systems, including power, heat
and water; disruptions in distribution channels; or the inability of suppliers
and customers to engage in normal business activities. The Company does not
currently have a contingency plan for Year 2000 disruptions. The Company will
develop a contingency plan based on the magnitude and probability that
operational disruptions may still occur on January 1, 2000. The Company
currently believes that the risk of disruption will be minimal since its
operations are geographically dispersed and rely on a large customer base and
one manufacturer. The Company does not expect the costs associated with its Year
2000 compliance to be material. Internal employees, whose salaries and wages are
included in normal operating expenses, have modified many of the Company's
information technology systems. Approximately $75,000 has been spent to date out
of the normal course of business. Future costs in the next two quarters have
been estimated at approximately $350,000.
Cautionary Statements
The Private Securities Litigation Reform Act of 1995 contains certain safe
harbors regarding forward-looking statements. From time to time, information
provided by the Company or statements made by its employees may contain
"forward-looking" information which involve risk and uncertainties. Any
statements in this report and accompanying materials that are not statements of
historical fact are forward-looking statements (including, but not limited to,
statements concerning the characteristics and growth of the Company's market and
customers, the Company's objectives and plans for future operations and products
and the Company's expected liquidity and capital resources). Such forward-
looking statements are based on a number of assumptions and involve a number of
risks and uncertainties, and accordingly, actual results could differ
materially. Factors that may cause such differences include, but are not limited
to: the continued and future acceptance of the Company's products and services,
the rate of growth in the industries of the Company's customers; the presence of
competitors with greater technical, marketing and financial resources; the
Company's ability to promptly and effectively respond to technological change to
meet evolving customer needs; capacity and supply constraints or difficulties;
and the Company's ability to successfully expand its operations. For a further
discussion of these and other significant factors to consider in connection with
forward-looking statements concerning the Company, reference is made to Exhibit
99 of the Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1996.
(9)
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company has limited exposure to market risk due to the nature of its
financial instruments. The Company's financial instruments consist of cash and
equivalents, accounts receivable, marketable securities, accounts payable,
deposits, accrued liabilities, and capital lease obligations. The fair value of
these financial instruments, other than marketable securities, as of February
28, 1999 approximate their carrying values.
Marketable securities are recorded at market value at February 28, 1999.
Such market value is not subject to changes in interest rates as the financial
instrument is an equity security and is not interest bearing.
The Company's interest rate exposure is limited primarily to interest rate
changes on its $7,500,000 variable rate line-of-credit facility. Any outstanding
amounts under the facility are presumed to approximate market as the facility's
interest rate will adjust accordingly with market rates. An immediate adverse
change in market interest rates would not have had any effect on the Company's
interest expense as there were no borrowings under the facility during fiscal
1999. In addition, the Company does not have any foreign currency exposure as it
does not have foreign subsidiaries and all amounts are transacted in U.S.
dollars.
Currently, the Company does not enter into financial instrument
transactions for trading or other speculative purposes. There have been no
material changes in the market risk to which the Company is exposed since the
end of the Company's preceding fiscal year.
(10)
<PAGE>
PART II - OTHER INFORMATION
Item 1. Not Applicable
Item 2. Not Applicable
Item 3. Not Applicable
Item 4. Not Applicable
Item 5. Not Applicable
Item 6a. Exhibit 27. Financial Data Schedule
b. No reports on Form 8-K were filed during the quarter for
which this report is filed.
(11)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
LoJack Corporation
------------------
Registrant
July 14, 1999 /s/ C. Michael Daley
--------------- --------------------
Date C. Michael Daley
Chief Executive Officer
July 14, 1999 /s/ Joseph F. Abely
-------------- -------------------
Date Joseph. F. Abely
President and Chief
Operating Officer
(Principal Financial Officer)
(12)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10Q FOR
THE QUARTER ENDING MAY 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-START> MAR-01-1999
<PERIOD-END> MAY-31-1999
<CASH> 6,577,874
<SECURITIES> 0
<RECEIVABLES> 11,348,145
<ALLOWANCES> 501,595
<INVENTORY> 4,012,636
<CURRENT-ASSETS> 24,128,119
<PP&E> 28,315,053
<DEPRECIATION> 18,947,508
<TOTAL-ASSETS> 35,677,035
<CURRENT-LIABILITIES> 9,547,210
<BONDS> 0
<COMMON> 224,684
0
0
<OTHER-SE> 20,988,241
<TOTAL-LIABILITY-AND-EQUITY> 35,677,035
<SALES> 22,379,993
<TOTAL-REVENUES> 22,501,407
<CGS> 9,968,539
<TOTAL-COSTS> 9,968,539
<OTHER-EXPENSES> 8,936,494
<LOSS-PROVISION> 8,767
<INTEREST-EXPENSE> 56,741
<INCOME-PRETAX> 3,678,880
<INCOME-TAX> 1,434,000
<INCOME-CONTINUING> 2,244,880
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,244,880
<EPS-BASIC> .13
<EPS-DILUTED> .12
</TABLE>
