ITEM 1 - BUSINESS
GENERAL
LoJack Corporation ("LoJack" or the "Company") was organized as a Massachusetts corporation in 1978. Its telephone number is (781) 326-4700.
LoJack developed and markets the LoJack System, a unique, patented system designed to assist law enforcement personnel in locating, tracking and recovering stolen vehicles. In addition, LoJack developed and markets CarSearch, a product line of its patented LoJack System, designated for use in international markets where it may not be practicable or desirable to implement the fully integrated LoJack System.
The LoJack System is comprised of a Registration System maintained and operated by LoJack; a Sector Activation System and Police Tracking Computers operated by law enforcement officials (the "Law Enforcement Components"); and the LoJack Unit, a VHF (very high frequency) transponder sold to consumers. The LoJack System is designed to be integrated into existing law enforcement computers and telecommunication networks and procedures. If a car equipped with a LoJack Unit is stolen, its owner reports the theft as usual to the local police department. Existing law enforcement computer and communication networks and procedures operate in the normal manner for a report of a stolen vehicle. If the theft involves a vehicle equipped with a LoJack Unit, a unique radio signal will be transmitted automatically to the LoJack Unit in the stolen vehicle activating its tracking signal. The tracking signal emitted from the LoJack Unit can be detected by the Police Tracking Computer installed in police patrol cars and aircraft throughout the coverage areas and used to lead law enforcement officers to the stolen vehicle. The Company also sells conventional vehicle security devices, which may be purchased as options with the LoJack Unit, under the names "LoJack Prevent" and "LoJack Alert."
OPERATION OF THE LOJACK SYSTEM IN THE UNITED STATES
Under agreements with state police agencies, LoJack generally furnishes the Law Enforcement Components for distribution to state, county, and municipal law enforcement agencies for a nominal rent. The installation, testing and maintenance of the Law Enforcement Components are primarily the responsibility of LoJack. The Law Enforcement Components are generally owned by LoJack or a LoJack subsidiary; the respective state, county or city law enforcement agency operate the LoJack System as required during the term of each such agreement. The agreements with the applicable law enforcement agencies are generally for initial terms of up to five (5) years. To date, any such agreements which have expired have been renewed or are in the process of renewal. Renewal or extension of any such agreement may be subject to competitive bidding.
The LoJack System has been implemented in the following domestic jurisdictions pursuant to agreements with applicable law enforcement agencies:
The Company is presently pursuing negotiations with several law enforcement agencies in the United States regarding the implementation of the LoJack System in jurisdictions in addition to those mentioned above. The Company's strategy is to expand the LoJack System to those jurisdictions where the combination of new vehicle sales, population density, and the incidence of vehicle theft is high. To date, LoJack has expanded into 15 of the original 16 markets it has targeted. Certain improvements to the Company's technology and interface with law enforcement systems have made expansion beyond the 16 targeted states economically feasible for the Company. Accordingly, over the next two years the Company plans to expand to certain jurisdictions which are contiguous to existing LoJack coverage areas as well to markets that have increased incidence of car theft. During fiscal 1999 the Company plans to expand coverage to Arizona, New Hampshire, Ohio, as well as to continue to expand the Texas operation to Houston and Austin.
THE LOJACK SYSTEM
The LoJack System consists of four basic components:
1. LoJack Unit 2. Police Tracking Computer 3. Sector Activation System 4. Registration System
The LoJack Unit. The LoJack Unit is the consumer component of the LoJack System and is installed in a purchaser's motor vehicle. The LoJack Unit consists of a VHF transponder, a microprocessor based computer, and a modem. The computer's memory contains a set of codes unique to the particular LoJack Unit and the vehicle in which it is installed. The microprocessor activates the Unit's transmitter upon receipt of its unique activation code from the Sector Activation System. Since each LoJack Unit has its own unique activation code and reply code, the microprocessor responds only upon receipt of the appropriate code. An activated LoJack Unit will continue to broadcast its reply code until it receives a properly coded message to stop. That message is sent after the police have recovered the vehicle. All transmissions are made on a nationwide radio frequency allocated by the Federal Communications Commission ("FCC") as a law enforcement radio service.
Police Tracking Computer. The Police Tracking Computer ("PTC") is a sophisticated radio direction finder. The PTC is used by police to locate and track activated LoJack Units. The PTC consists of a radio receiver with a directional antenna array, doppler signal processor, microprocessor based computer and a controllable display. When the PTC detects a LoJack Unit transmission from a stolen vehicle, it displays the reply code along with graphic indications of signal strength and the direction toward the stolen vehicle. The officer may then radio the reply code to the police dispatcher and obtain a vehicle description.
The PTC is generally installed in police vehicles. Modified designs of the PTC have been developed for use in helicopters, as well as fixed locations such as toll booths, radio towers, or police communication centers. Effective tracking range varies under different topographical and other conditions, from about one mile to approximately five miles under ideal conditions.
Sector Activation System. The Sector Activation System ("SAS") is a computerized system that controls and commands the LoJack System and activates LoJack Units in stolen vehicles. It is designed to function with existing law enforcement computer and telecommunication networks and procedures. Routine and normal processing of a stolen vehicle report activates the SAS, even if the person reporting the theft and the officer responding are unfamiliar with the LoJack System.
The Sector Activation Computer ("SAC") contains a file with up-to-date information on vehicles equipped with LoJack Units. This computer works in conjunction with pre-existing law enforcement computer and communication systems. This file contains, for each LoJack equipped vehicle, the vehicle identification number ("VIN") assigned by the vehicle's manufacturer, and the activation and reply codes for the LoJack Unit installed in that vehicle.
When the VIN of a stolen vehicle is entered into existing stolen vehicle reporting systems, it is compared automatically to those contained in the LoJack file. When a match occurs, the SAC automatically transmits the appropriate activation code. Police officers who have detected the transmissions of an activated LoJack Unit call into a dispatcher for a description of the transmitting vehicle. After the vehicle is recovered, the VIN is again entered into the SAC to generate the appropriate deactivation code and to reset the LoJack Unit for future use.
The SAC controls a network of radio transmitters positioned on sites throughout the coverage area. The SAC accepts stolen vehicle reports from the state law enforcement computer and initiates activations and deactivations of LoJack Units.
Registration System. The Registration System is a proprietary method of assigning digital codes to be transmitted and received by LoJack Units in such manner that unique activation codes are permanently correlated with the unique VIN assigned to the vehicle in which the LoJack Unit has been installed.
MARKETING AND DISTRIBUTION OF LOJACK UNITS - UNITED STATES
LoJack's marketing approach in each jurisdiction focuses on franchised new car dealers who will offer the LoJack Unit as an option on both their new and used car sales. LoJack also markets conventional vehicle security devices sold under the names "LoJack Prevent" and "LoJack Alert."
LoJack's sales force routinely visits franchised new car dealers to educate and train dealership personnel on the benefits of the LoJack System. LoJack's direct marketing efforts emphasize the benefits to the dealers and their customers of the LoJack Unit as a purchase option for new and used car buyers. Like other options, the LoJack Unit can usually be financed conveniently as a part of the purchase price of the vehicle. LoJack uses direct advertising to consumers to generate product awareness and demand.
LoJack also has plans to increase its efforts to market its products directly to operators of fleet and commercial vehicles.
LoJack maintains full responsibility for installation and warranty service of LoJack Units sold by the Company both for the convenience of dealers through whom the LoJack Units are marketed and for LoJack to maintain a high degree of quality control and security over its technology.
In addition to distributing LoJack Units itself, through its subsidiaries or licensees, LoJack may consider joint ventures or other cooperative arrangements to expedite the expansion of the LoJack System. The actual method of distribution will be determined on a market-by-market basis.
INTERNATIONAL OPERATIONS
The Company also licenses the use of its stolen vehicle recovery system technology in selected international markets. In connection with its efforts to expand outside of the United States, the Company has utilized its stolen recovery vehicle technology to develop the CarSearch Stolen Vehicle Recovery System ("CarSearch"). Unlike the LoJack System currently operational in the United States, CarSearch has the flexibility of operating independent of existing law enforcement communication networks.
The Company targets CarSearch for use by either law enforcement or private security companies in selected international markets where the implementation of a fully integrated LoJack System may not be feasible. This application of the LoJack technology allows stolen vehicles to be activated, tracked and recovered without the direct involvement of local police.
Present international license agreements have thus far been denominated in U.S. dollars and structured with up-front licensing fees, which may be substantial and are non-recurring, and provide that the Company will subsequently either supply components and products at prices to be determined from time to time and/or receive royalties based upon the licensees' revenues. It is the Company's intention to continue to license the use of either the LoJack System or CarSearch in other selected international markets on the same basis as described above. The Company was granted an option, exercisable through March 1998, to purchase up to 5% of the outstanding common stock of its United Kingdom licensee. In March, 1998 the Company exercised this option and purchased 292,507 common shares for an aggregate exercise price of $1,259,170. The Company subsequently sold 150,000 shares of its investment in this licensee in April, 1998. The Company does not anticipate making any additional direct investments in the operations of foreign licensees in the foreseeable future. The Company generally does not recognize revenues during the period immediately after entering into an agreement with a licensee. Recognition of revenues does not generally commence until after the licensee receives any required governmental approvals, such as frequency allocation for the CarSearch or LoJack System. The governmental approval process may be time-consuming.
As of February 28, 1998, the Company had Licensees operating stolen vehicle recovery systems using LoJack's technology in the following countries: Argentina, Colombia, Czech Republic, Ecuador, Greece, Hong Kong, Kenya, Korea, Panama, Russia, Slovak Republic, South Africa, Trinidad and Tobago, United Kingdom, and Venezuela. The Company also has
entered into agreements to license the use of LoJack's technology in countries such as Germany, Mexico, Brazil, the Peoples Republic of China, Nigeria and Poland. The Company expects that the Mexican licensee will be operational during early fiscal 1999. The date for commencement of operations in these countries has not been set, as their ability to operate may be subject to the licensees obtaining certain governmental approval which may be time consuming or may not be obtained, as well as adequate financing. The Company is also pursuing similar agreements for other countries.
Approximately 19% of the Company's revenues in fiscal 1998 were derived from export revenues. These revenues were comprised of product sales and licensing revenues from unaffiliated customers in foreign countries. Approximately 95% of the Company's foreign product sales are covered by letters of credit or require payment in advance from the licensee. (See "Management's Discussion and Analysis--International Operations" and Note 9 to the Notes to Financial Statements which are included in LoJack's 1998 Annual Report which is filed as Exhibit 13 hereto.)
GOVERNMENT REGULATION AND APPROVAL
In 1989, the FCC put into effect a rule change to allocate frequency 173.075 MHz for nationwide use by state and local law enforcement agencies for stolen vehicle recovery systems. Law enforcement agencies in jurisdictions where the Company operates have been granted authority by the FCC to use this frequency for LoJack's stolen vehicle recovery system.
In connection with its domestic operations, the Company must obtain the approval of law enforcement agencies, as well as executive or legislative bodies, for implementation of the LoJack System before sales of LoJack Units can commence in a given jurisdiction. The approval process may be time consuming and costly and is subject to considerations generally affecting the process of governmental decision making. In some jurisdictions, governmental approval may be terminable at the convenience of the executive or legislative body. Any such termination could have a material effect on future sales in any such jurisdiction.
If LoJack were to seek to charge more than nominal prices for the Law Enforcement Components, governmental appropriation of funds will be required. Most government agencies have established, by policy, statute or regulation, a process requiring competitive bidding for all acquisitions of products and equipment. This process may cause delay and expense to the Company. To date, the Company has not sought to charge law enforcement agencies more than nominal prices for the Law Enforcement Components, and does not expect to do so in the near future.
AUTOMOBILE INSURANCE BENEFITS
Management considers automobile insurance premium discounts to be an inducement for the purchase of LoJack Units by vehicle owners. The application of insurance premium discounts, which are generally applied to the vehicle owner's comprehensive insurance, varies from state to state and, in some cases, from insurance company to insurance company. For example, insurance regulations in some states, such as Massachusetts, Rhode Island, New York and New Jersey, provide for mandated insurance discounts for automobiles protected by automobile security systems. In other states, such as California, where the granting of such discounts is not regulated, the determination is made by individual insurance carriers. Currently, insurance discounts, which vary from state to state, and nationally by certain insurance carriers, provide for discounts of up to 35% on comprehensive insurance premiums for vehicles equipped with a vehicle recovery and anti-theft device. The Company continues to work on legislative initiatives in states where the LoJack System is operational which would establish or increase discounts available to vehicle owners who install the LoJack Unit. Since the insurance industry is, in general, heavily regulated, the process of seeking voluntary or mandatory discounts for vehicles may involve significant time and effort by LoJack.
PRODUCT WARRANTY
LoJack warrants to consumers that the LoJack Unit will be free from defects in material or workmanship for a period of two years, subject to extension at the customer's option for an additional charge. LoJack also warrants to purchasers of LoJack Units that if their LoJack equipped vehicle is stolen within two years of installation and not recovered within 24 hours from the time that the report of the theft is reported to the police, LoJack will refund the full purchase price of the LoJack Unit up to a maximum of $595.
PATENTS AND TRADEMARKS
LoJack holds United States Patent Nos. 4,818,998 and 4,908,629, which expire in 2006 and 2007, respectively, covering the LoJack System. The Company also holds patents in various countries in Europe, Asia, South America, and North America. Patent protection has also been sought by LoJack in several other countries. Although management believes the patents have
value, there can be no assurance such patents will effectively deter others from manufacturing and marketing a stolen vehicle recovery system. LoJack's name and logo are registered trademarks in the United States and many foreign countries.
COMPETITION
Several competitors or potential competitors are marketing or have announced the development of products, including those which are GPS-based, which claim to have stolen vehicle recovery features that may be directly competitive with the LoJack System. To the knowledge of management, none are compatible with the LoJack System, and none are proposed to be operated or actively monitored exclusively by law enforcement agencies as is the LoJack System. Additionally, most of these potential competitors require the consumer to pay recurring fees for their service which LoJack does not.
LoJack markets the LoJack System as a stolen vehicle recovery device. Management believes, however, that makers of auto theft prevention devices view the LoJack System as competitive, and, consequently, LoJack believes it faces competition from companies that sell vehicle security devices.
Some of the competitors and potential entrants into the vehicle tracking industry may have greater resources than LoJack. In addition, there can be no assurance that a competitor will not develop a system of theft detection or recovery, including other stolen vehicle recovery systems that may or may not require government approvals, that would compete with or be superior to the LoJack System.
SUBCONTRACTORS
LoJack has subcontracted the manufacture of the LoJack Unit, which is designed for automated production using surface mounted technology, to Motorola, Inc. LoJack believes that several companies have the capability to manufacture LoJack Units using this technology. The Company also has contracted with Motorola for development and redesign of the LoJack Unit which would accommodate additional applications, and would meet the technical and economical constraints of the leasing and trucking industries.
LoJack subcontracts with Micrologic, Inc. ("Micrologic") of Waltham, Massachusetts, to perform a substantial portion of the engineering, design and implementation of the LoJack and CarSearch Systems in new jurisdictions as well as to perform certain research and development. LoJack owns all rights in any new developments created by Micrologic as a subcontractor of LoJack.
LoJack has granted to Micrologic, through April 2000, the exclusive rights to assemble Police Tracking Computers. LoJack believes that other companies have the same capabilities as Micrologic, but that changing to a new subcontractor for these tasks could involve delays and additional cost to LoJack.
INVENTORY
LoJack seeks to maintain a 60-day supply of LoJack Units, which it believes is in line with sales levels and sufficient to rapidly fulfill orders. The Company maintains an inventory of certain Law Enforcement Components beyond its current requirements in order to facilitate expansion into additional domestic markets.
RESEARCH AND DEVELOPMENT
During fiscal years 1998, 1997 and 1996 the approximate amounts spent by LoJack on company-sponsored research and development activities were $244,000, $518,000, and $516,000, respectively.
EMPLOYEES
As of May 1, 1998, the Company and its subsidiaries had a total of 414 full-time employees.
EXECUTIVE OFFICERS OF THE REGISTRANT
There is incorporated herein by reference the information concerning C. Michael Daley, who is Chairman of the Board, Chief Executive Officer and Treasurer of the Company, from the Company's definitive Proxy Statement for its Annual Meeting of Stockholders to be held on July 15, 1998, under the headings "Proposal No. 1 - Election of Directors" and "Board of Directors." Information concerning the Company's other executive officers is set forth below.
Mr. Abely joined LoJack in October 1988 as Senior Vice President and Chief Financial Officer. He was named President and Chief Operating Officer in January 1996. From 1976 until October 1988, Mr. Abely was employed by the accounting firm of Deloitte Haskins & Sells, where he served as a partner since 1985. Mr. Abely is a Certified Public Accountant.
Mr. Duvall joined LoJack in 1985 and is Senior Vice President of Operations and Technical Development. From 1984 to 1985, he was a part owner and manager of Rich's Car Tunes, a company engaged in the sale and installation of consumer electronic products in the automotive aftermarket. For six years prior to 1984, Mr. Duvall was Vice President of Marketing and Sales for Analog and Digital Systems, Inc., a manufacturer of consumer electronic products.
Mr. Mullins joined LoJack in February 1996 and was appointed Vice President of Sales and Marketing as of March 1, 1996. From 1976 until joining LoJack Mr. Mullins served in a variety of positions at Proctor & Gamble Company, Inc., including District Sales Manager, Customer Business Development Manager, and most recently as Northeast Operation Manager.
Mr. Conner joined LoJack in 1985 and is Vice President of Government Relations. From 1982 to 1985, he was a franchise director for Continental Cablevision of Boston, Massachusetts. From 1980 to 1982, Mr. Conner was a franchise director for American Television Communications of Denver, Colorado, a cable television operator.
Each executive officer is elected for a term scheduled to expire at the meeting of Directors following the annual meeting of Stockholders or until a successor is duly chosen and qualified. There are no arrangements or understandings pursuant to which any executive officer was or is to be selected for election or reelection. There are no family relationships among any Directors or executive officers, except that C. Michael Daley, a Director and executive officer, and James A. Daley, a Director, are brothers.
ITEM 2
ITEM 2 - PROPERTIES
The Company's executive offices are located at 333 Elm Street, Dedham, Massachusetts, under a lease for such space expiring in May 2001. In addition, the Company leases various facilities in Massachusetts, New Jersey, Pennsylvania, Michigan, California, Illinois, Georgia, Virginia, Florida and Texas under operating leases whose terms expire from 1998 to 2003. The leases contain renewal options ranging from two to five years. Because the Company's operations do not require any special facilities, the Company does not anticipate any difficulty in finding space adequate for its purposes at reasonable rates.
ITEM 3
ITEM 3 - LEGAL PROCEEDINGS
On March 9, 1998, Thomas Coffey, John Redmond, Bob Gnatowski and Richard McNichol (collectively, the "Plaintiffs"), all former employees of the Company, filed a lawsuit against the Company in the Superior Court of New Jersey alleging that the Company wrongfully terminated the Plaintiff's employment. The Plaintiffs allege age discrimination claims and assert that the Company intentionally inflicted emotional distress upon them. The Plaintiffs are seeking compensatory damages, punitive damages, attorney's fees and costs. The Company believes the claims are without merit and intends to vigorously defend the lawsuit. However, there can be no assurance as to the outcome of the lawsuit. Even if the lawsuit were not to proceed to trial, the litigation could result in substantial costs to the Company. An adverse judgment or settlement could subject the Company to significant liabilities and expenses. The Company has procured insurance which may cover all or part of the liabilities associated with the claims made by the Plaintiffs. However, there can be no assurance that such insurance will cover all, if any part, of any liabilities.
ITEM 4
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None. PART II
ITEM 5
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated herein by reference to the section entitled "Market for Registrant's Common Equity and Related Stockholder Matters" on page 1 of the Company's 1998 Annual Report, which is filed herewith as Exhibit 13.
ITEM 6
ITEM 6 - SELECTED FINANCIAL DATA
The information required by this item is incorporated herein by reference to the section entitled "Selected Financial Data" on page 4 of the Company's 1998 Annual Report, which is filed herewith as Exhibit 13.
ITEM 7
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this item is incorporated herein by reference to the section entitled "Management's Discussion and Analysis," pages 5 through 8 of the Company's 1998 Annual Report, which is filed herewith as Exhibit 13.
ITEM 8
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by reference to the consolidated financial statements of the Company (including the notes thereto) and the auditors' report thereon appearing on pages 9 through 19 of the Company's 1998 Annual Report, which is filed herewith as Exhibit 13.
ITEM 9
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G(3) of Form 10-K and instruction 3 to Item 401(b), the information required by this item concerning executive officers, including certain information incorporated herein by reference to the information appearing in the Company's definitive Proxy Statement concerning C. Michael Daley, who is also Chairman of the Board, Chief Executive Officer and Treasurer of the Company, is set forth in Part I, Item 1 under the heading "Executive Officers of the Registrant" and information concerning Directors, including Mr. Daley, is incorporated by reference to the sections entitled "Proposal No. 1 - Election of Directors" and "Board of Directors" in the Registrant's definitive Proxy Statement for its Annual Meeting of Stockholders to be held July 15, 1998.
There is incorporated herein by reference to the discussion under "Principal and Management Stockholders - Compliance with Section 16(a) of the Securities Exchange Act of 1934" in the Company's definitive Proxy Statement for its Annual Meeting of Stockholders to be held July 15, 1998 the information with respect to any delinquent filings of reports pursuant to Section 16(a) of the Securities Exchange Act of 1934.
ITEM 11
ITEM 11 - EXECUTIVE COMPENSATION
Information required by this Item is incorporated herein by reference to the information appearing in the Company's definitive Proxy Statement for its Annual Meeting of Stockholders to be held on July 15, 1998 under the heading "Executive Compensation."
ITEM 12
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this item is incorporated herein by reference to the information appearing in the Company's definitive Proxy Statement for its Annual Meeting of Stockholders to be held on July 15, 1998 under the heading "Principal and Management Stockholders."
ITEM 13
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are included as part of this report:
(1) CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------
The following financial statements of the Company and the report of the independent certified public accountants are incorporated by reference to the Company's 1998 Annual Report:
Independent Auditors' Report Relating to the Consolidated Financial Statements (and notes thereto) Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements
(2) CONSOLIDATED FINANCIAL STATEMENT SCHEDULE -----------------------------------------
The following report and consolidated financial statement schedule is filed as part of this report and should be read in conjunction with the consolidated financial statements (and notes thereto):
Independent Auditors' Report Relating to the Consolidated Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts
Other financial statement schedules have been omitted because they are not required or not applicable or because the required information is included in the consolidated financial statements or notes thereto.
(3) EXHIBITS --------
Certain of the exhibits listed hereunder have been previously filed with the Commission as exhibits to certain registration statements and periodic reports as indicated in the footnotes below and are incorporated herein by reference pursuant to Rule 411 promulgated under the Securities Act and Rule 24 of the Commission's Rules of Practice. The location of each document so incorporated by reference is indicated by footnote.
3A. Restated Articles of Organization (incorporated by reference to Exhibit 3A filed with the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1994 (the "1994 Form 10-K"))
3B. Amended By-Laws (incorporated by reference to exhibit 3B filed with the Company's Annual Report on Form 10-K for the fiscal year ended February 29, 1992 (the "1992 Form 10-K"))
4A. Specimen Share Certificate (incorporated by reference to exhibit 4A to File No. 2-74238-B)
4A1. Amended Specimen Share Certificate (incorporated by reference to exhibit 4B to File No. 2-98609)
10A. Volume Assembly Contract with Micrologic, Inc. (incorporated by reference to exhibit 10I to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1986 (the "1986 Form 10-K"))
10B. Supply Agreement with Motorola (incorporated by reference to exhibit 10J to the 1986 Form 10-K)
10C. Agreement with the City of Los Angeles dated March 9, 1989 (incorporated by reference to exhibit 10K to File No. 33-27457)
10D. Contract between the State of Michigan and LoJack Corporation dated as of April 24, 1989 (incorporated by reference to exhibit 10O filed with the Company's Annual Report on Form 10-k for the fiscal year ended February 28, 1990 ("the 1990 Form 10-K"))
10E. Agreement between LoJack Corporation and the Illinois State Police dated as of August 23, 1990 (incorporated by reference to exhibit 10P to the 1990 Form 10-K)
10F.++ 1985 Non-Qualified Stock Option Plan, as amended (incorporated by reference to exhibit 10F to 1992 Form 10-K)
10G.++ Directors' Compensation Plan (incorporated by reference to exhibit 10G to 1992 Form 10-K)
10H.++ LoJack Corporation Restated and Amended Stock Incentive Plan (incorporated by reference to Exhibit 10H to the 1994 Form 10-K)
10I.++ Amendment Number One to Restated and Amended Stock Incentive Plan (incorporated by reference to Exhibit 10ss filed with the Company's Annual Report on Form 10-K for the fiscal year ended February 29, 1996 (the "1996 Form 10-K"))
10J.++ Amendment Number Two to Restated and Amended Stock Incentive Plan
10K. Form of Agreement with respect to options granted to certain officers and employees (incorporated by reference to exhibit 10H to File No. 33-27457)
10L. Lease Agreement LoJack Sector Activation System dated February 23, 1988 between Recovery Systems, Inc. and the Florida Department of Motor Vehicles (incorporated by reference to exhibit 10K to 1992 Form 10-K)
10M. Accepted Proposal by LoJack Corporation to the Massachusetts Department of Public Safety (incorporated by reference to exhibit 10F to File No. 2-74238-B)
10N. Lease Agreement between Auto Recovery Systems, Inc. and the State of New Jersey dated July 31, 1989 (incorporated by reference to exhibit 10M to 1992 Form 10-K)
10O. Loan Agreement dated December 10, 1993 among The First National Bank of Boston and LoJack Corporation, LoJack Midwest Corporation, LoJack of New Jersey Corporation, Recovery Systems, Inc. and CarSearch Corporation (incorporated by reference to Exhibit 10N to the 1994 Form 10-K)
10P. Lease Agreement Number VA-901212-LOJ between LoJack Corporation and the Commonwealth of Virginia dated September 17, 1991 (incorporated by reference to exhibit 10W to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993 (the "1993 Form 10-K"))
10Q. Lease Agreement between LoJack Corporation and the State of Georgia Department of Public Safety dated June 6, 1991 (incorporated by reference to exhibit 10X to 1993 Form 10-K)
10R.++ Form of Senior Management Option (incorporated by reference to exhibit 10Z to 1993 Form 10-K)
10S. License, Trademark and Supply Agreement dated July 16, 1992, by and between CarSearch Corporation, a subsidiary of LoJack Corporation, and Secar, Ltd. Kutuzovovn, Bratislava, Czechoslovakia (incorporated by reference to exhibit 10aa to 1993 Form 10-K)
10T. Patent License and Ancillary Know-How Agreement dated December 30, 1991, and Second Amendment (relating to the Patent, License and Know-How Agreement of December 30, 1991), dated January 29, 1993, (the Second Amendment incorporates by reference the First Amendment to the Patent, License and Know-How Agreement dated April 27, 1992 which is superseded), each by and between LoJack Corporation and Stolen Vehicle Recovery Systems Limited, Aylesbury, Buckingham, UK (incorporated by reference to exhibit 10bb to 1993 Form 10-K)
10U. Agreement dated January 21, 1994 between the New York Division of State Police and LoJack Corporation (incorporated by reference to Exhibit 10aa to the 1994 Form 10-K)
10V. Memorandum of Understanding dated July 29, 1993 with the District of Columbia Metropolitan Police Department (incorporated by reference to Exhibit 10cc filed with the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1995 (the "1995 Form 10-K"))
10W. Memorandum of Understanding dated February 28, 1994 with Rhode Island State Police (incorporated by reference to Exhibit 10dd to the 1995 Form 10-K)
10X. Contract dated July 15, 1993 with the State of Connecticut (incorporated by reference to Exhibit 10ee to the 1995 Form 10-K)
10Y. License, Trademark, and Supply Agreement dated August 10, 1993 between CarSearch Corporation and Vehicles Security Resources Limited, Nassau, Bahamas (incorporated by reference to Exhibit 10ii to the 1995 Form 10-K)
10Z. License, Trademark, and Supply Agreement dated August 23, 1993 between CarSearch Corporation and MaxRich Consultants, Ltd., Kowloon, Hong Kong (incorporated by reference to Exhibit 10jj to the 1995 Form 10-K)
10aa. License, Trademark, and Supply Agreement dated April 15, 1994 between CarSearch Corporation and Triones Taiwan Co., Ltd., Taichung, Taiwan, R.O.C. (incorporated by reference to Exhibit 10ll to the 1995 Form 10-K)
10bb. Patent, License, Trademark, and Supply Agreement dated October 4, 1994 between LoJack International Corporation, a subsidiary of LoJack Corporation, and Sucess Trading, S.A., Buenos Aires, Argentina (incorporated by reference to Exhibit 10mm to the 1995 Form 10-K)
10cc. License, Trademark, and Supply Agreement dated October 13, 1994 between LoJack International Corporation and Tracker Vehicle Location Systems (PTY) Ltd., Cape Town, South Africa (incorporated by reference to Exhibit 10nn to the 1995 Form 10-K)
10dd. License and Ancillary Know-How Agreement dated October 1, 1995 between LoJack International Corporation and Detektor, Bad Homburg, Germany (incorporated by reference to Exhibit 10oo to the 1996 Form 10-K)
10ee. Patent License and Ancillary Know-How Agreement dated November 30, 1994 between LoJack International Corporation and LoJack Italia, Bologna, Italy (incorporated by reference to Exhibit 10pp to the 1995 Form 10-K)
10ff. License and Supply Agreement dated April 25, 1995 between LoJack International Corporation and United States Consolidated Technologies Corporation (incorporated by reference to Exhibit 10qq to the 1995 Form 10-K) Amendment No. 1 to Restated and Amended Stock Incentive Plan
10gg. Second Amendment to Loan Agreement dated as of February 20, 1996 among The First National Bank of Boston and LoJack Corporation, LoJack International Corporation, LoJack of New Jersey Corporation, Recovery Systems, Inc. and LoJack Holdings Corporation (incorporated by reference to Exhibit 10tt to the 1996 Form 10-K)
10hh. Amended and Restated Revolving Credit and Term Note dated as of February 20, 1996 in the amount of $7,500,000 made by LoJack Corporation, LoJack International Corporation, LoJack of New Jersey Corporation, Recovery Systems, Inc. and LoJack Holdings Corporation payable to the order of The First National Bank of Boston (incorporated by reference to Exhibit 10mm to the 1996 Form 10-K)
10ii. Trademark and Supply Agreement dated August 15, 1995 between LoJack International and CarTrack Kenya Limited, Nairobi, Kenya (incorporated by reference to Exhibit 10yy to the 1996 Form 10-K)
10jj. Third Amendment to Loan Agreement dated as of October 31, 1996 among The First National Bank of Boston and LoJack Corporation, LoJack International Corporation, LoJack of New Jersey Corporation, Recovery Systems, Inc., LoJack Holdings Corporation and LoJack Venture Corporation (incorporated by reference to Exhibit 10jj filed with the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1997 (the "1997 Form 10-K"))
10kk. Second Amended and Restated Revolving Credit and Term Note dated as of October 31, 1996 in the amount of $7,500,000 made by LoJack Corporation, LoJack International Corporation, LoJack of New Jersey Corporation, Recovery Systems, Inc., LoJack Holdings Corporation, and LoJack Venture Corporation payable to the order of The First National Bank of Boston (incorporated by reference to Exhibit 10kk to the 1997 Form 10-K)
10ll. Fourth Amendment to Loan Agreement dated as of February 28, 1997among The First National Bank of Boston and LoJack Corporation, LoJack International Corporation, LoJack of New Jersey Corporation, Recovery Systems, Inc., LoJack Holdings Corporation, and LoJack Venture Corporation (incorporated by reference to Exhibit 10ll to the 1997 Form 10-K)
10mm. Third Amended and Restated Revolving Credit and Term Note payable to the order of The First National Bank of Boston dated as of February 28, 1997 in the amount of $7,500,000 made by LoJack Corporation, LoJack International Corporation, LoJack of New Jersey Corporation, Recovery Systems, Inc., LoJack Holdings Corporation, LoJack Venture Corporation, and LoJack of Pennsylvania Corporation, and LoJack FSC, Ltd. (incorporated by reference to Exhibit 10mm to the 1997 Form 10-K)
10nn. License, Trademark and Supply Agreement dated September 10, 1996 between LoJack International and S1 Corporation, Seoul, Korea (incorporated by reference to Exhibit 10nn to the 1997 Form 10-K)
10oo. Agreement dated September 1, 1996 between LoJack Corporation and the Texas Department of Public Safety (incorporated by reference to Exhibit 10oo to the 1997 Form 10-K)
10pp. Agreement between Commonwealth of Pennsylvania, Pennsylvania State Police and LoJack Corporation dated May 14, 1996 (incorporated by reference to Exhibit 10pp to the 1997 Form 10-K)
10qq. Agreement between the Maryland Department of State Police and LoJack Corporation dated November 8, 1996 (incorporated by reference to Exhibit 10qq to the 1997 Form 10-K)
10rr. Joint Venture Agreement dated as of December 1, 1995 by and between LoJack Venture Corporation and Micrologic, Inc. (incorporated by reference to Exhibit 10rr to the 1997 Form 10-K)
10ss. License Agreement dated as of December 1, 1995 between SCT Development Venture and LoJack Corporation (incorporated by reference to Exhibit 10ss to the 1997 Form 10-K)
10tt. Development Agreement dated as of December 1, 1995 by and between SCT Development Venture and Micrologic, Inc. (incorporated by reference to Exhibit 10tt to the 1997 Form 10-K)
10uu.* Fifth Amendment to Loan Agreement dated February 28, 1998 among BankBoston N. A. and LoJack Corporation, LoJack International Corporation, LoJack New Jersey Corporation, Recovery Systems Inc., LoJack Holdings Corporation, LoJack Venture Corporation, LoJack of Pennsylvania Corporation, and LoJack FSC, Ltd.
10vv.* Fourth Amended and Restated Revolving Credit and Term Note payable to the order of BankBoston N.A.dated as of February 28, 1998 in the amount of $7,500,000 made by LoJack Corporation, LoJack International Corporation, LoJack of New Jersey Corporation, Recovery Systems, Inc.,LoJack Holdings Corporation, LoJack Venture Corporation, and LoJack of Pennsylvania Corporation, and LoJack FSC, Ltd.
11.* Statement re: Computation of per share earnings
13.* 1998 Annual Report to Stockholders
21.* Subsidiaries of the Registrant
23.* Consent of Deloitte & Touche LLP
27.* Financial Data Schedule
99. "Safe Harbor" Statement under Private Securities Litigation Reform Act of 1995 ( incorporated by reference to Exhibit 99 to the 1996 Form 10-K)
- ---------------------------- * Indicates an exhibit which is filed herewith. ++ Indicates an exhibit which constitutes an executive compensation plan.
(b) REPORTS ON FORM 8-K: No reports on Form 8-K were filed by the Company during the last quarter of the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the Town of Dedham, Commonwealth of Massachusetts, on the 27th day of May 1998.
LOJACK CORPORATION (Registrant)
BY: /s/ C. Michael Daley ----------------------------------------- C. Michael Daley Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in their capacities and on the date indicated.
INDEX TO INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENT SCHEDULE
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of LoJack Corporation:
We have audited the consolidated financial statements of LoJack Corporation and subsidiaries as of February 28, 1998 and 1997, and for each of the three years in the period ended February 28, 1998, and have issued our report thereon dated April 24, 1998; such consolidated financial statements and report are included in your 1998 Annual Report to Stockholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of LoJack Corporation, listed in Item 14. This consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statement taken as a whole, presents fairly in all material respects the information set forth therein.
/s/ Deloitte & Touche LLP DELOITTE & TOUCHE LLP
Boston, Massachusetts April 24, 1998
SCHEDULE II
LOJACK CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED FEBRUARY 28, 1998, 1997 AND FEBRUARY 29, 1996 - --------------------------------------------------------------------------------
(1) Net accounts written off.