<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 August 31, 2000
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)
<TABLE>
<S> <C>
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)
</TABLE>
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 15,799,481 shares issued and outstanding of $.01 par value, common
stock, as of October 6, 2000.
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Part I. Financial Information PAGE
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets:
August 31, 2000 and February 29, 2000........................................... 1
Consolidated Statements of Operations:
Three Months Ended August 31, 2000 and 1999..................................... 2
Six Months Ended August 31, 2000 and 1999....................................... 3
Consolidated Statements of Cash Flows:
Six Months Ended August 31, 2000 and 1999..................................... 4
Notes to Consolidated Financial Statements..................................... 5
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition...................................... 8
Item 3. Quantitative and Qualitative Disclosures
About Market Risk.......................................................... 11
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K............................................. 12
Signatures.................................................................... 13
Exhibit 27....................................................................... 14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AUGUST 31, FEBRUARY 29,
2000 2000
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents................................ $ 12,324,054 $ 6,023,323
Accounts receivable - net........................... 13,742,797 12,096,998
Inventories......................................... 4,215,754 3,593,760
Prepaid expenses and other.......................... 441,821 152,393
Prepaid income taxes............................... - 1,595,421
Deferred income taxes............................... 1,043,021 1,021,394
------------ ------------
Total current assets............................ 31,767,447 24,483,289
PROPERTY AND EQUIPMENT - Net........................ 10,322,495 9,780,828
OTHER ASSETS - Net.................................. 1,360,675 897,173
------------ ------------
TOTAL............................................... $ 43,450,617 $ 35,161,290
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of capital lease
obligations...................................... $ 1,646,250 $ 1,556,536
Accounts payable.................................... 4,720,558 3,016,220
Accrued taxes....................................... 595,365 -
Accrued and other liabilities....................... 1,499,611 1,351,218
Current portion of deferred revenue................. 1,738,338 1,621,933
Accrued compensation................................ 1,222,319 1,484,850
------------ ------------
Total current liabilities...................... 11,422,441 9,030,757
------------ ------------
DEFERRED REVENUE.................................... 3,772,744 3,026,442
------------ ------------
DEFERRED INCOME TAXES............................... 428,474 645,730
------------ ------------
CAPITAL LEASE OBLIGATIONS........................... 1,296,255 1,204,412
------------ ------------
COMMITMENTS AND CONTINGENCIES.......................
STOCKHOLDERS' EQUITY:
Common stock - $.01 par value; authorized,
35,000,000 shares; issued, 22,505,081
and 22,474,581 shares at August 31, 2000 and
February 29, 2000, respectively.................. 225,051 224,746
Additional paid-in-capital.......................... 60,843,745 60,688,316
Retained earnings................................... 31,312,773 25,639,941
Treasury stock, at cost, 6,468,600
and 6,393,600 shares of common stock at
August 31, 2000 and February 29, 2000,
respectively....................................... (65,850,866) (65,299,054)
------------ ------------
Total stockholders' equity.................... 26,530,703 21,253,949
------------ ------------
TOTAL............................................... $ 43,450,617 $ 35,161,290
============ ============
</TABLE>
See notes to consolidated financial statements
(1)
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
(Unaudited)
AUGUST 31, AUGUST 31,
2000 1999
<S> <C> <C>
Revenues.................................................................... $26,316,881 $24,084,707
Cost of goods sold.......................................................... 12,015,201 11,180,475
----------- -----------
Gross margin................................................................ 14,301,680 12,904,232
----------- -----------
Costs and expenses:
Systems costs and research and development.................................. 622,838 602,738
Marketing................................................................... 5,520,960 5,659,129
General and administrative.................................................. 2,647,226 2,451,447
Depreciation and amortization............................................... 451,128 444,476
----------- -----------
Total.................................................................... 9,242,152 9,157,790
----------- -----------
Operating income ........................................................... 5,059,528 3,746,442
----------- -----------
Other income (expense):
Interest income............................................................. 155,052 100,840
Interest expense............................................................ (81,265) (69,463)
Gain on sale of fixed assets................................................ 49,321 11,814
Other expense............................................................... - (520,687)
Gain on sale of marketable securities....................................... - 864,091
----------- -----------
Total.................................................................... 123,108 386,595
----------- -----------
Income before provision for income taxes.................................... 5,182,636 4,133,037
Provision for income taxes.................................................. 2,021,000 1,612,000
----------- -----------
Net income ................................................................. $ 3,161,636 $ 2,521,037
=========== ===========
Earnings per share:
Basic....................................................................... $ 0.20 $ 0.15
=========== ===========
Diluted..................................................................... $ 0.19 $ 0.14
=========== ===========
Weighted average shares:
Basic....................................................................... 16,079,362 16,846,478
=========== ===========
Diluted..................................................................... 16,773,288 17,898,372
=========== ===========
</TABLE>
See notes to consolidated financial statements.
(2)
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(Unaudited)
AUGUST 31, AUGUST 31,
2000 1999
<S> <C> <C>
Revenues..................................................................... 50,632,435 $46,586,114
Cost of goods sold........................................................... 23,088,954 21,149,013
-------------- -------------
Gross margin................................................................. 27,543,481 25,437,101
-------------- -------------
Costs and expenses:
Systems costs and research and
development............................................................... 1,064,225 995,779
Marketing.................................................................... 11,390,063 11,527,345
General and administrative................................................... 5,060,792 4,692,038
Depreciation and amortization................................................ 930,793 879,122
-------------- -------------
Total..................................................................... 18,445,873 18,094,284
-------------- -------------
Operating income ............................................................ 9,097,608 7,342,817
-------------- -------------
Other income (expense):
Interest income.............................................................. 254,159 215,742
Interest expense............................................................. (159,162) (126,201)
Gain on sale of fixed assets................................................. 107,227 36,155
Other expense................................................................ - (520,687)
Gain on sale of marketable securities........................................ - 864,091
-------------- -------------
Total..................................................................... 202,224 469,100
-------------- -------------
Income before provision
for income taxes............................................................ 9,299,832 7,811,917
Provision for income taxes................................................... 3,627,000 3,046,000
-------------- -------------
Net income .................................................................. $ 5,672,832 $ 4,765,917
============== ==============
Earnings per share:
Basic........................................................................ $ 0.35 $ 0.28
============== =============
Diluted...................................................................... $ 0.34 $ 0.26
============== =============
Weighted average shares:
Basic........................................................................ 16,085,421 17,115,794
============== =============
Diluted...................................................................... 16,782,428 18,028,035
============== =============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(Unaudited)
AUGUST 31, AUGUST 31,
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................................................................... $ 5,672,832 $ 4,765,917
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................................................................. 2,004,549 1,758,503
Provision for doubtful accounts................................................................ 50,855 68,049
Deferred income taxes.......................................................................... (238,883) 206,839
Gain on sale of marketable securities.......................................................... - (864,091)
Advances to licensee and related costs......................................................... - 520,687
Increase (decrease) in cash from changes in
assets and liabilities:
Accounts receivable.......................................................................... (1,696,654) (1,339,710)
Inventories.................................................................................. (621,994) 2,267,883
Prepaid expenses and other................................................................... (289,428) (4,609)
Prepaid income taxes......................................................................... 1,595,421 (1,509,825)
Other assets................................................................................. 14,268 (471,757)
Accrued taxes................................................................................ 595,365 -
Accounts payable............................................................................. 1,704,338 (770,740)
Accrued and other liabilities................................................................ 748,569 294,381
------------ ------------
Net cash provided by operating activities................................................... 9,539,238 4,921,527
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and equipment- net..................................................... (1,359,573) (484,916)
Advances to licensee and related costs........................................................... - (520,687)
Expenditures for product development............................................................. (523,973) -
Proceeds from sale of marketable securities...................................................... - 1,477,548
------------ ------------
Net cash (used for) provided by investing activities........................................ (1,883,546) 471,945
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options........................................................................ 155,734 208,359
Repayment of capital lease obligations........................................................... (958,883) (740,572)
Repurchase of common stock....................................................................... (551,812) (7,196,024)
------------ ------------
Net cash used for financing activities...................................................... (1,354,961) (7,728,237)
------------ ------------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS....................................................... 6,300,731 (2,334,765)
BEGINNING CASH AND EQUIVALENTS.................................................................... 6,023,323 10,230,215
------------ ------------
ENDING CASH AND EQUIVALENTS....................................................................... $ 12,324,054 $ 7,895,450
============ ============
</TABLE>
See notes to consolidated financial statements.
(4)
<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
2000 amounts have been reclassified to conform with the fiscal 2001
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 and six months ended August
31, 2000 and 1999 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 six months ended August 31, 2000 and 1999
was $159,000 and $126,000, respectively. Cash paid for income taxes for the
six months ended August 31, 2000 and 1999 was $1,549,000 and $4,260,000,
respectively. For the six months ended August 31, 2000 and 1999 the Company
incurred capital lease obligations of $1,140,000 and $569,000 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 for the three months ended August 31 is as follows:
2000 1999
Weighted average shares for basic 16,079,362 16,846,478
Dilutive effect of stock options 693,926 1,051,894
------------ ------------
Weighted average shares for diluted 16,773,288 17,898,372
============ ============
A reconciliation of weighted average shares used for the basic and diluted
computations for the six months ended August 31 is as follows:
2000 1999
Weighted average shares for basic 16,085,421 17,115,794
Dilutive effect of stock options 697,007 912,241
------------ ------------
Weighted average shares for diluted 16,782,428 18,028,035
============ ============
(5)
<PAGE>
5. Comprehensive Income:
For the three months and six months ended August 31, 2000, there are no
items defined as other comprehensive income. For the three and six months
ended August 31, 1999, the only item that would be included in
comprehensive income is an unrealized gain of $323,000 related to an
investment in common stock. Comprehensive income for the three months ended
August 31, 2000 and 1999 totaled approximately $3,162,000 and $2,844,000,
respectively. For the six months ended August 31, 2000 and 1999,
comprehensive income totaled approximately $5,673,000 and $5,089,000,
respectively.
6. Segment Reporting:
In March 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 such operations.
Accordingly, 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. Certain general overhead
costs have been allocated to each segment based on methods considered to be
reasonable by the Company's management. Income taxes have been allocated to
each segment using the Company's effective tax rate.
The following table presents information about the Company's operating
segments for the three months ended August 31, 2000 and 1999:
<TABLE>
<CAPTION>
Domestic International
Segment Segment Consolidated
--------------- --------------- ---------------
<S> <C> <C> <C>
1999
----
Revenues:
Product sales $ 20,992,322 $ 1,921,885 $ 22,914,207
License fees and
system component revenues - 1,170,500 1,170,500
--------------- --------------- ---------------
Total revenues $ 20,992,322 $ 3,092,385 $ 24,084,707
=============== =============== ===============
Segment net income $ 2,191,866 $ 329,171 $ 2,521,037
=============== =============== ===============
2000
----
Revenues:
Product sales $ 22,247,987 $ 3,391,576 $ 25,639,563
License fees and
system component revenues - 677,318 677,318
--------------- --------------- ---------------
Total revenues $ 22,247,987 $ 4,068,894 $ 26,316,881
=============== =============== ===============
Segment net income $ 2,190,901 $ 970,735 $ 3,161,636
=============== =============== ===============
</TABLE>
(6)
<PAGE>
The following table presents information about the Company's operating
segments for the six months ended August 31, 2000 and 1999:
<TABLE>
<CAPTION>
Domestic International
Segment Segment Consolidated
--------------- --------------- ---------------
<S> <C> <C> <C>
1999
----
Revenues:
Product sales $ 41,647,357 $ 3,724,526 $ 45,371,883
License fees and
system component revenues - 1,214,231 1,214,231
--------------- --------------- ---------------
Total revenues $ 41,647,357 $ 4,938,757 $ 46,586,114
=============== =============== ===============
Segment net income $ 4,139,319 $ 626,598 $ 4,765,917
=============== =============== ===============
2000
----
Revenues:
Product sales $ 43,433,007 $ 6,113,704 $ 49,546,711
License fees and
system component revenues - 1,085,724 1,085,724
--------------- --------------- ---------------
Total revenues $ 43,433,007 $ 7,199,428 $ 50,632,435
=============== =============== ===============
Segment net income $ 4,041,392 $ 1,631,440 $ 5,672,832
=============== =============== ===============
</TABLE>
(7)
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Three and six months ended August 31, 2000 ("fiscal 2001")
versus three and six months ended August 31, 1999 ("fiscal 2000")
Results of Operations
Revenues for the three and six months ended August 31, 2000 increased by
$2,232,000 and $4,046,000, or 9%, respectively, to $26,317,000 and $50,632,000
from $24,085,000 and $46,586,000, respectively, for the same periods a year
earlier. Domestic revenues increased by $1,256,000 and $1,786,000, or 6% and 4%,
for the three and six months ended August 31, 2000, respectively, to $22,248,000
and $43,433,000 from $20,992,000 and $41,647,000, respectively, for the same
periods a year earlier. Revenues from product sales and licensing fees related
to international licensing agreements increased by $976,000 and $2,260,000, or
32% and 46%, for the three and six months ended August 31, 2000, respectively,
to $4,068,000 and $7,199,000 from $3,092,000 and $4,939,000, respectively, for
the same periods a year earlier.
The increase in domestic revenues resulted primarily from an increase of 11% and
9% in the number of LoJack Units sold for the three and six months ended August
31, 2000, respectively, as compared to the same periods a year earlier. This
increase was partially offset by a decrease in the average revenue earned per
LoJack Unit sale as a result of volume variable pricing discounts earned by
large dealer group customers.
The increase in international revenues for the three months ended August 31,
2000 of $976,000 was related to an increase of $1,470,000 from sales of and
royalties on the international version of the LoJack Units and related products
which were partially offset by a decrease of $494,000 in revenues from the sale
of system components and license fees. The increase in international revenues
for the six months ended August 31, 2000 of $2,260,000 was related to an
increase of $2,390,000 from sales of and royalties on the international version
of the LoJack Units and related products partially offset by a decrease of
$130,000 in revenues from the sale of system components and license fees. The
decrease in the system component revenues and license fees, which are generally
non-recurring in nature, were primarily generated from new licensees. The
increase in revenues from the sales of the international version of the LoJack
Unit which are generally recurring in nature, were generated primarily from
existing licensees.
Cost of goods sold was 46% of revenues for the three and six months ended August
31, 2000 compared to 46% and 45%, respectively, of revenues for the three and
six months ended August 31, 1999. Domestically, cost of sales for the three
months ended August 31, 2000 decreased to 45% of related revenues from 46% for
the same period a year earlier; the cost of sales for the six months ended
August 31, 2000 remained constant at 45%. International costs of sales increased
to 50% of related revenues for the three months ended August 31, 2000 from 49% a
year earlier; the cost of sales for the six months ended August 31, 2000
remained constant at 50%. International cost of sales fluctuations result from
changes in the product and royalty mix of revenues.
Systems costs and research and development increased by $20,000 and $68,000 for
the three and six months ended August 31, 2000, respectively to $623,000 and
$1,064,000 from $603,000 and $996,000 for the same period a year earlier.
Systems costs increased by $85,000 and $182,000 for the three and six months
ended August 31, 2000 as compared with the same periods a year earlier primarily
as a result of increased engineering salaries and benefits. Research and
development expense decreased by $65,000 and $114,000 for the three and six
months ended August 31, 2000, respectively, primarily as a result of the timing
of certain work related to the redesign of the LoJack Unit and other research
and development initiatives. Approximately $196,000 and $524,000 of product
development costs associated with a new feature of the LoJack Unit were
capitalized during the three and six months ended August 31, 2000, respectively,
under SOP 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use".
(8)
<PAGE>
Marketing expense decreased $138,000 and $137,000 for the three and six months
ended August 31, 2000, respectively, to $5,521,000 and $11,390,000 from
$5,659,000 and $11,527,000 for the same periods a year earlier. These decreases
were primarily related to the decreases in media expense of $457,000 and
$594,000, respectively, due to the timing of production of advertising and media
buy in fiscal year 2001. The offsetting increase of $319,000 and $457,000,
respectively, was the result of an increase in marketing salaries and benefits,
an increase in size and quality of sales force, and increase in overall business
volume.
General and administrative expense increased by $196,000 and $369,000 for the
three and six months ended August 31, 2000, respectively, to $2,647,000 and
$5,061,000 from $2,451,000 and $4,692,000 for the same periods a year earlier.
These increases were primarily the result of increases in administrative
salaries and benefits, largely in the information systems area.
Depreciation and amortization increased by $7,000 and $52,000 for the three and
six months ended August 31, 2000, respectively, to $451,000 and $931,000 from
$444,000 and $879,000 for the same periods a year earlier.
Interest income increased $54,000 and $38,000 for the three and six months ended
August 31, 2000, respectively, to $155,000 and $254,000 from $101,000 and
$216,000 for the same periods a year earlier, due to higher average cash
balances.
Interest expense increased by $12,000 and $33,000 for the three and six months
ended August 31, 2000, respectively, to $81,000 and $159,000 from $69,000 and
$126,000 for the same periods a year earlier, as a result of interest on
additional capital leases of installation vehicles.
Gain on sale of fixed assets increased by $37,000 and $71,000 for the three and
six months ended August 31, 2000, respectively, to $49,000 and $107,000 from
$12,000 and $36,000 for the same periods a year. These increases result from the
number of fully depreciated installation vehicles sold during the period in the
normal course of business.
Other expense for the three and six months ended August 31, 1999 represents the
write-off of $521,000 of advances to the Company's German licensee who was
experiencing severe financial difficulties and costs incurred related to such
advances. The licensee subsequently filed for bankruptcy.
Gain on sale of marketable securities for the three and six months ended August
31, 1999 of $864,000 was the sale of the remaining portion of the Company's
stock in its United Kingdom licensee.
The provision for income taxes increased by $409,000 and $581,000 for the three
and six months ended August 31, 2000, respectively, to $2,021,000 and $3,627,000
from $1,612,000 and $3,046,000 for the same periods a year earlier as the result
of the increase 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 increased by $641,000 and $907,000 for
the three and six months ended August 31, 2000, respectively, to $3,162,000 and
$5,673,000 from $2,521,000 and $4,766,000 for the same periods a year earlier.
(9)
<PAGE>
Liquidity and Capital Resources
In the six months ended August 31, 2000 cash and equivalents increased by
$6,301,000. The overall increase is the result of cash provided by operating
activities of $9,539,000 offset by cash used for investing activities of
$1,883,000 and cash used for financing activities of $1,355,000. Cash flows
provided by operating activities for the six months ended August 31, 2000 of
$9,539,000 was primarily attributed to net income of $5,673,000, depreciation
and amortization of $2,004,000, an increase in accounts payable of $1,704,000
and a net decrease in prepaid income taxes of $2,191,000. The increase in
accounts payable is primarily related to the timing of payment to certain
vendors including one inventory vendor. These increases are partially offset by
an accounts receivable increase of $1,697,000.
Cash flows from investing activities included expenditures for property and
equipment for the six months ended August 31, 2000 of $1,359,000 (exclusive of
additions under capital leases of $1,140,000) and product development costs
capitalized of $524,000.
Cash flows used for financing activities included repayment of capital leases of
$959,000, as well as the repurchase of 75,000 shares of the Company's common
stock during the six months ended August 31, 2000 for $552,000. Total cumulative
common shares repurchased under the Company's stock repurchase program were
6,468,600 shares as of August 31, 2000. As of August 31, 2000 there are 731,400
additional common shares authorized for repurchase under the Company's existing
repurchase program.
The Company is presently pursuing opportunities to expand its stolen vehicle
recovery system to several additional domestic markets which meet the
qualifications set forth in the Company's strategic plan. The Company expects
that, pending receipt of necessary approvals, certain of these potential
expansion markets will become operational during fiscal 2001. The Company's
introduction of the planned Telematics product will require capital
expenditures. In addition, there will be capital expenditures necessary for
additional sources of distribution. The Company expects that it will spend
approximately $1,500,000 on capital expenditures (excluding assets purchased
under capital lease agreements) during the remainder of fiscal 2001.
As of August 31, 2000 the Company had working capital of $20,345,000. The
Company believes that it can meet its anticipated capital and operating
requirements for the remainder of fiscal 2001 and thereafter 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 August 31, 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, as amended, on the
Company's consolidated financial statements.
(10)
<PAGE>
In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." The SAB summarizes certain of the SEC's views in applying revenue
recognition in financial statements. The provisions of SAB No. 101 are effective
in our fourth quarter of fiscal year 2001. The Company has not yet completed the
evaluation of the effects of SAB No. 101.
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 29, 2000.
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 at February 29, 2000
consist of cash and equivalents, accounts receivable, accounts payable,
deposits, accrued liabilities, and capital lease obligations. The fair value of
these financial instruments as of February 29, 2000 approximate their carrying
values.
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 value, 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 2000. 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.
(11)
<PAGE>
PART II - OTHER INFORMATION
Item 1. Not Applicable
Item 2. Not Applicable
Item 3. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the Company was held on
July 19, 2000. Stockholders acted affirmatively to elect
nominees for directors proposed by management.
VOTES "FOR" VOTES "WITHELD"
C. Michael Daley 13,403,277 243,164
James A. Daley 13,403,277 243,664
Lee T. Sprague 13,403,277 243,164
Robert Murray 13,404,152 242,289
Larry Renfro 13,404,152 242,289
Harvey Rosenthal 13,404,152 242,289
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.
(12)
<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
October 13, 2000 /s/ C. Michael Daley
---------------- --------------------
Date C. Michael Daley
Chief Executive Officer
October 13, 2000 /s/ Joseph F. Abely
---------------- -------------------
Date Joseph. F. Abely
President and Chief
Operating Officer
(Principal Financial Officer)
(13)
