<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 November 30, 2000
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 15,617,581 shares issued and outstanding of $.01 par value,
common stock, as of January 5, 2001.
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Part I. Financial Information PAGE
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets:
November 30, 2000 and February 29, 2000............................................. 1
Consolidated Statements of Operations:
Three Months Ended November 30, 2000 and 1999....................................... 2
Nine Months Ended November 30, 2000 and 1999........................................ 3
Consolidated Statements of Cash Flows:
Nine Months Ended November 30, 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 NOVEMBER 30, FEBRUARY 29,
2000 2000
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents............................................................ $ 8,942,129 $ 6,023,323
Accounts receivable - net....................................................... 14,240,640 12,096,998
Inventories..................................................................... 4,871,232 3,593,760
Prepaid expenses and other...................................................... 602,442 152,393
Prepaid income taxes............................................................ 454,880 1,595,421
Deferred income taxes........................................................... 1,092,888 1,021,394
------------ ------------
Total current assets........................................................ 30,204,211 24,483,289
PROPERTY AND EQUIPMENT - Net.................................................... 10,562,517 9,780,828
OTHER ASSETS - Net.............................................................. 1,425,574 897,173
------------ ------------
TOTAL........................................................................... $ 42,192,302 $ 35,161,290
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of capital lease
obligations................................................................. $ 1,600,761 $ 1,556,536
Accounts payable................................................................ 4,647,424 3,016,220
Accrued and other liabilities................................................... 1,658,878 1,351,218
Current portion of deferred revenue............................................ 1,855,994 1,621,933
Accrued compensation............................................................ 1,408,384 1,484,850
------------ ------------
Total current liabilities................................................... 11,171,441 9,030,757
------------ ------------
DEFERRED REVENUE................................................................ 3,985,761 3,026,442
------------ ------------
DEFERRED INCOME TAXES........................................................... 365,586 645,730
------------ ------------
CAPITAL LEASE OBLIGATIONS....................................................... 1,246,357 1,204,412
------------ ------------
COMMITMENTS AND CONTINGENCIES...................................................
STOCKHOLDERS' EQUITY:
Common stock - $.01 par value; authorized,
35,000,000 shares; issued, 22,517,281 and
22,474,581 shares at November 30, 2000 and
February 29, 2000, respectively.............................................. 225,173 224,746
Additional paid-in-capital...................................................... 60,899,985 60,688,316
Retained earnings............................................................... 33,065,434 25,639,941
Treasury stock, at cost, 6,841,000
and 6,393,600 shares of common stock at
November 30, 2000 and February 29, 2000,
respectively.................................................................... (68,767,435) (65,299,054)
------------ ------------
Total stockholders' equity.................................................. 25,423,157 21,253,949
------------ ------------
TOTAL........................................................................... $ 42,192,302 $ 35,161,290
============ ============
</TABLE>
See notes to consolidated financial statements.
(1)
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
(Unaudited)
NOVEMBER 30, NOVEMBER 30,
2000 1999
Revenues........................................ $ 24,351,724 $ 22,168,276
Cost of goods sold.............................. 12,144,155 10,404,030
------------ ------------
Gross margin.................................... 12,207,569 11,764,246
------------ ------------
Costs and expenses:
Systems costs and research and
development.................................. 624,022 483,710
Marketing....................................... 5,801,580 4,505,668
General and administrative...................... 2,694,999 2,265,015
Depreciation and amortization................... 415,792 490,823
------------ ------------
Total........................................ 9,536,393 7,745,216
------------ ------------
Operating income................................ 2,671,176 4,019,030
------------ ------------
Other income (expense):
Interest income................................. 237,248 93,967
Interest expense................................ (80,414) (67,204)
Gain on sale of fixed assets.................... 45,452 62,318
Other expense................................... 200 0
------------ ------------
Total........................................ 202,486 89,081
------------ ------------
Income before provision
for income taxes............................... 2,873,662 4,108,111
Provision for income taxes...................... 1,121,000 1,603,000
------------ ------------
Net income...................................... $ 1,752,662 $ 2,505,111
============ ============
Earnings per share:
Basic........................................... $ 0.11 $ 0.15
============ ============
Diluted......................................... $ 0.11 $ 0.15
============ ============
Weighted average shares:
Basic........................................... 15,804,067 16,337,491
============ ============
Diluted......................................... 16,557,801 17,073,619
============ ============
See notes to consolidated financial statements.
(2)
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
(Unaudited)
NOVEMBER 30, NOVEMBER 30,
2000 1999
<S> <C> <C>
Revenues................................................. $ 74,984,159 $ 68,754,389
Cost of goods sold....................................... 35,233,109 31,553,043
------------ ------------
Gross margin............................................. 39,751,050 37,201,346
------------ ------------
Costs and expenses:
Systems costs and research and
development.............................................. 1,688,247 1,479,488
Marketing................................................ 17,191,642 16,033,013
General and administrative............................... 7,755,791 6,957,053
Depreciation and amortization............................ 1,346,585 1,369,944
------------ ------------
Total.................................................... 27,982,265 25,839,498
------------ ------------
Operating income......................................... 11,768,785 11,361,848
------------ ------------
Other income (expense):
Interest income.......................................... 491,406 309,709
Interest expense......................................... (239,577) (193,406)
Gain on sale of fixed assets............................. 152,679 58,473
Other expense............................................ 200 (480,687)
Gain on sale of marketable securities.................... -- 864,091
------------ ------------
Total.................................................... 404,708 558,180
------------ ------------
Income before provision
for income taxes......................................... 12,173,493 11,920,028
Provision for income taxes............................... 4,748,000 4,649,000
------------ ------------
Net income............................................... $ 7,425,493 $ 7,271,028
============ ============
Earnings per share:
Basic.................................................... $ 0.46 $ 0.43
============ ============
Diluted.................................................. $ 0.44 $ 0.41
============ ============
Weighted average shares:
Basic.................................................... 16,001,001 16,858,246
============ ============
Diluted.................................................. 16,716,917 17,711,782
============ ============
</TABLE>
See notes to consolidated financial statements.
(3)
<PAGE>
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
(Unaudited)
NOVEMBER 30, NOVEMBER 30,
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ....................................................................... $ 7,425,493 $ 7,271,028
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ................................................ 2,921,492 2,719,293
Provision for doubtful accounts .............................................. 67,918 154,025
Deferred income taxes ........................................................ (351,638) (81,232)
Gain on sale of marketable securities ........................................ -- (864,091)
Advances to licensee and related costs ....................................... -- 480,687
Increase (decrease) in cash from changes in
assets and liabilities:
Accounts receivable ...................................................... (2,211,560) (2,129,166)
Inventories .............................................................. (1,277,472) 1,315,688
Prepaid expenses and other ............................................... (450,049) (5,925)
Prepaid income taxes ..................................................... 1,140,541 (468,814)
Other assets ............................................................. 5,408 (4,335)
Accounts payable ......................................................... 1,631,204 964,420
Accrued and other liabilities ............................................ 1,424,574 357,105
------------ ------------
Net cash provided by operating activities............................... 10,325,911 9,708,683
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and equipment- net ..................................... (2,083,473) (1,092,627)
Purchase of patent ............................................................... -- (425,000)
Advances to licensee and related costs ........................................... -- (480,687)
Expenditures for product development ............................................. (603,114) (157,013)
Proceeds from sale of marketable securities ...................................... -- 1,477,548
------------ ------------
Net cash used for investing activities .................................. (2,686,587) (677,779)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options ........................................................ 212,096 231,009
Repayment of capital lease obligations ........................................... (1,464,233) (1,133,027)
Repurchase of common stock ....................................................... (3,468,381) (13,066,741)
------------ ------------
Net cash used for financing activities ................................... (4,720,518) (13,968,759)
------------ ------------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS......................................... 2,918,806 (4,937,855)
BEGINNING CASH AND EQUIVALENTS ..................................................... 6,023,323 10,230,215
------------ ------------
ENDING CASH AND EQUIVALENTS ........................................................ $ 8,942,129 $ 5,292,360
============ ============
</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 nine months ended
November 30, 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 nine months ended November 30, 2000 and 1999
was $240,000 and $193,000, respectively. Cash paid for income taxes for the
nine months ended November 30, 2000 and 1999 was $3,833,000 and $5,110,000,
respectively. For the nine months ended November 30, 2000 and 1999 the
Company incurred capital lease obligations of $1,550,000 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 for the three months ended November 30 is as follows:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Weighted average shares for basic 15,804,067 16,377,491
Dilutive effect of stock options 753,734 696,128
--------------- ---------------
Weighted average shares for diluted 16,557,801 17,073,619
=============== ===============
A reconciliation of weighted average shares used for the basic and diluted
computations for the nine months ended November 30 is as follows:
2000 1999
Weighted average shares for basic 16,001,001 16,858,246
Dilutive effect of stock options 715,916 853,536
--------------- ---------------
Weighted average shares for diluted 16,716,917 17,711,782
=============== ===============
</TABLE>
(5)
<PAGE>
5. Comprehensive Income:
For the three months and nine months ended November 30, 2000, there are no
items defined as other comprehensive income. For the three and nine months
ended November 30, 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
November 30, 2000 and 1999 totaled approximately $1,753,000 and $2,828,000,
respectively. For the nine months ended November 30, 2000 and 1999,
comprehensive income totaled approximately $7,425,000 and $7,594,000,
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 November 30, 2000 and 1999:
<TABLE>
<CAPTION>
Domestic International
Segment Segment Consolidated
----------- -------------- -------------
<S> <C> <C> <C>
1999
----
Revenues:
Product sales $ 19,612,045 $ 1,983,871 $ 21,595,916
License fees and
system component revenues - 572,360 572,360
----------------- ---------------- --------------
Total revenues $ 19,612,045 $ 2,556,231 $ 22,168,276
================= ================ ==============
Segment net income $ 2,015,092 $ 490,019 $ 2,505,111
================= ================ ==============
2000
----
Revenues:
Product sales $ 19,806,774 $ 4,526,250 $ 24,333,024
License fees and
system component revenues - 18,700 18,700
----------------- --------------- --------------
Total revenues $ 19,806,774 $ 4,544,950 $ 24,351,724
================= =============== ==============
Segment net income $ 1,067,760 $ 684,902 $ 1,752,662
================= ================ ==============
</TABLE>
(6)
<PAGE>
The following table presents information about the Company's operating
segments for the nine months ended November 30, 2000 and 1999:
<TABLE>
<CAPTION>
Domestic International
Segment Segment Consolidated
------------------ ------------------- --------------------
<S> <C> <C> <C>
1999
----
Revenues:
Product sales $ 61,259,402 $ 5,708,396 $ 66,967,798
License fees and
system component revenues - 1,786,591 1,786,591
---------------- ----------------- --------------------
Total revenues $ $61,259,402 $ 7,494,987 $ 68,754,389
================ ================= ====================
Segment net income $ 6,154,411 $ 1,116,617 $ 7,271,028
================ ================= ====================
2000
----
Revenues:
Product sales $ 63,239,781 $ 10,643,960 $ 73,883,741
License fees and
system component revenues - 1,100,418 1,100,418
---------------- ----------------- --------------------
Total revenues $ 63,239,781 $ 11,744,378 $ 74,984,159
================ ================= ====================
Segment net income $ 5,109,151 $ 2,316,342 $ 7,425,493
================ ================= ====================
</TABLE>
(7)
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
Three and nine months ended November 30, 2000 ("fiscal 2001")
versus three and nine months ended November 30, 1999 ("fiscal 2000")
Results of Operations
Revenues for the three and nine months ended November 30, 2000 increased by
$2,183,000 and $6,230,000, or 10% and 9%, to $24,351,000 and $74,984,000 from
$22,168,000 and $68,754,000, respectively, for the same periods a year earlier.
Domestic revenues increased by $194,000 and $1,981,000, or 1% and 3%, for the
three and nine months ended November 30, 2000, respectively, to $19,806,000 and
$63,240,000 from $19,612,000 and $61,259,000, respectively, for the same periods
a year earlier. Revenues from product sales and licensing fees related to
international licensing agreements increased by $1,989,000 and $4,249,000, or
78% and 57%, for the three and nine months ended November 30, 2000,
respectively, to $4,545,000 and $11,744,000 from $2,556,000 and $7,495,000,
respectively, for the same periods a year earlier.
The increase in domestic revenues resulted primarily from an increase of 6% and
8% in the number of LoJack Units sold for the three and nine months ended
November 30, 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 November 30,
2000 of $1,989,000 was related to an increase of $2,543,000 from sales of and
royalties on the international version of the LoJack Units and related products
which were partially offset by a decrease of $554,000 in revenues from the sale
of system components and license fees. The increase in international revenues
for the nine months ended November 30, 2000 of $4,249,000 was related to an
increase of $4,935,000 from sales of and royalties on the international version
of the LoJack Units and related products partially offset by a decrease of
$686,000 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, resulted from fewer 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 50% and 47%, respectively, of revenues for the three and
nine months ended November 30, 2000 compared to 47% and 46%, respectively, of
revenues for the three and nine months ended November 30, 1999. Domestically,
cost of sales for the three months ended November 30, 2000 increased to 48% of
related revenues from 46% for the same period a year earlier; the cost of sales
for the nine months ended November 30, 2000 increased to 46% of related revenues
from 45% for the same period a year earlier. International costs of sales
increased to 60% of related revenues for the three months ended November 30,
2000 from 51% a year earlier; the cost of sales for the nine months ended
November 30, 2000 increased to 54% of related revenues from 50% a year earlier.
International cost of sales fluctuations result from changes in the product and
royalty mix of revenues.
Systems costs and research and development increased by $140,000 and $209,000
for the three and nine months ended November 30, 2000, respectively to $624,000
and $1,688,000 from $484,000 and $1,479,000 for the same period a year earlier.
Systems costs increased by $105,000 and $288,000 for the three and nine months
ended November 30, 2000 as compared with the same periods a year earlier
primarily as a result of increased engineering salaries and benefits. Research
and development expense increased by $35,000 for the three months ended November
30, 2000; research and development expense decreased by $79,000 for the nine
months ended November 30, 2000, primarily as a result of the timing of certain
work related to the redesign of the LoJack Unit and other research and
development initiatives.
(8)
<PAGE>
Approximately $79,000 and $603,000 of product development costs associated with
a new feature of the LoJack Unit were capitalized during the three and nine
months ended November 30, 2000, respectively, under SOP 98-1, "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use".
Marketing expense increased $1,296,000 and $1,159,000 for the three and nine
months ended November 30, 2000, respectively, to $5,802,000 and $17,192,000 from
$4,506,000 and $16,033,000 for the same periods a year earlier. These increases
were related to the increases in media expense of $787,000 and $194,000,
respectively, due to the timing of production of advertising and media buy in
fiscal year 2001. The additional increase of $509,000 and $965,000,
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 $430,000 and $799,000 for the
three and nine months ended November 30, 2000, respectively, to $2,695,000 and
$7,756,000 from $2,265,000 and $6,957,000 for the same periods a year earlier.
These increases were primarily the result of increases in administrative
salaries and benefits.
Depreciation and amortization decreased by $75,000 for the three months ended
November 30, 2000 for the same period a year earlier. Depreciation and
amortization decreased by $23,000 for the nine months ended November 30, 2000
for the same period a year earlier.
Interest income increased $143,000 and $181,000 for the three and nine months
ended November 30, 2000, respectively, to $237,000 and $491,000 from $94,000 and
$310,000 for the same periods a year earlier, due to higher average cash
balances.
Interest expense increased by $13,000 and $47,000 for the three and nine months
ended November 30, 2000, respectively, to $80,000 and $240,000 from $67,000 and
$193,000 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 decreased by $17,000 for the three months ended
November 30, 2000, to $45,000 from $62,000 for the same period a year earlier.
Gain on sale of fixed assets increased by $95,000 for the nine months ended
November 30, 2000, to $153,000 from $58,000 for the same period a year earlier.
These fluctuations result from the number of fully depreciated installation
vehicles sold during the period in the normal course of business.
Other expense for the nine months ended November 30, 1999 represents the write-
off of $481,000 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 nine months ended November 30,
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 decreased by $482,000 for the three months ended
November 30, 2000, to $1,121,000 from $1,603,000 for the same period a year
earlier. The provision for income taxes increased by $99,000 for the nine months
ended November 30, 2000, to $4,748,000 from $4,649,000 for the same period a
year earlier. These fluctuations result from changes 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 $752,000 for the three
months ended November 30, 2000, to $1,753,000 from $2,505,000 for the same
period a year earlier. Net income increased by $154,000 for the nine months
ended November 30, 2000, to $7,425,000 from $7,271,000 for the same period a
year earlier.
(9)
<PAGE>
Liquidity and Capital Resources
In the nine months ended November 30, 2000 cash and equivalents increased by
$2,919,000. The overall increase is the result of cash provided by operating
activities of $10,326,000 offset by cash used for investing activities of
$2,687,000 and cash used for financing activities of $4,720,000. Cash flows
provided by operating activities for the nine months ended November 30, 2000 of
$10,326,000 was primarily attributed to net income of $7,425,000, depreciation
and amortization of $2,921,000, an increase in accounts payable of $1,631,000,
an increase in accrued and other liabilities of $1,424,000 and a net decrease in
prepaid income taxes of $1,141,000. The increase in accounts payable is
primarily related to the timing of payment to certain vendors. These increases
are partially offset by an accounts receivable increase of $2,212,000 and an
increase in inventories of $1,277,000.
Cash flows from investing activities included expenditures for property and
equipment for the nine months ended November 30, 2000 of $2,084,000 (exclusive
of additions under capital leases of $1,550,000) and product development costs
capitalized of $603,000.
Cash flows used for financing activities included repayment of capital leases of
$1,464,000, as well as the repurchase of 447,400 shares of the Company's common
stock during the nine months ended November 30, 2000 for $3,468,000. Total
cumulative common shares repurchased under the Company's stock repurchase
program were 6,841,000 shares as of November 30, 2000. As of November 30, 2000
there are 359,000 additional common shares authorized for repurchase under the
Company's existing repurchase program. In December, the board of directors
authorized a 2,000,000 share increase in the number of shares the Company may
repurchase.
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 $500,000 on capital expenditures (excluding assets purchased under
capital lease agreements) during the remainder of fiscal 2001.
As of November 30, 2000 the Company had working capital of $19,033,000. 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 November 30, 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 commencing March 1,
(10)
<PAGE>
2001. Management is currently evaluating the effect of adopting SFAS No. 133,
as amended, and does not believe that its adoption will have a material effect
on the Company's financial position or results of operations.
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
and November 30, 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 and
November 30, 2000 approximate its 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 any effect on the
Company's interest expense, as there are no borrowings under the facility during
fiscal 2001. 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
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
January 15, 2001 /s/ Joseph F. Abely
---------------- -------------------
Date Joseph. F. Abely
President and Chief
Operating Officer
January 15, 2001 /s/ Keith Farris
---------------- ----------------
Date Keith Farris
Chief Financial Officer
(13)
