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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 2004

OR

For the transition period from              to             .

Commission File Number 1-8439

LOJACK CORPORATION

(Exact name of registrant as specified in its charter)

(781) 251-4700

(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  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    YES  ¨    NO  x

There were 15,346,196 shares issued and outstanding of the registrant’s common stock, $.01 par value, as of May 10, 2004.

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LOJACK CORPORATION AND SUBSIDIARIES

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LOJACK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

See notes to unaudited consolidated financial statements.

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LOJACK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share amounts)

See notes to unaudited consolidated financial statements.

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LOJACK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

See notes to unaudited consolidated financial statements.

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LOJACK CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Certain reclassifications have been made to the unaudited interim statements for the three months ended March 31, 2003 to conform to current year presentation.

Cash payments for interest, relating to capital lease obligations, for the three months ended March 31, 2004 and 2003, were $14,000 and $40,000, respectively. Cash payments for income taxes for the three months ended March 31, 2004 and 2003, were $897,000 and $279,000, respectively.

During the quarter ended March 31, 2004, the Company granted 62,750 shares of restricted stock under the Company’s 2003 Stock Incentive Plan. The Company incurred stock-based compensation totaling $14,000 relating to the issuance of restricted stock (see note 8).

Periodically, the Company has made investments in its licensees in the form of cash and by converting receivables into equity. During the first quarter of 2003, the Company acquired a 12.5% equity interest in its Mexican licensee by converting $1,502,000 of an outstanding receivable. Additionally, during the first quarter of 2003, an outstanding receivable of $306,000 was converted into a 5% convertible debenture, and subsequently an additional equity interest, in the Company’s French licensee. In both instances, the carrying amount of the receivable was deemed to be equal to the fair value of the investment in the licensee.

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The Company accounts for stock-based compensation for employees and directors under the recognition and measurement principles of APB No. 25, “Accounting for Stock Issued to Employees,” and related interpretations, and has elected the disclosure alternative under SFAS No. 123, “Accounting for Stock-Based Compensation.” Stock-based employee compensation costs of approximately $14,000 relating to the issuance of restricted common stock are reflected in net income for the quarter ended March 31, 2004. No stock-based employee compensation was included in net income for the quarter ended March 31, 2003, as all options granted under the Company’s stock plans had an exercise price equal to the market value of the underlying common stock on the date of the grant. Had a compensation cost for the Company’s stock plans been determined consistent with SFAS No. 123, the Company’s net income and basic and diluted net income per share for the three months ended March 31, 2004 and 2003, would have been as follows:

Basic earnings per common share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per common share reflect the effect of the exercise of the Company’s outstanding options (using the treasury stock method), except where such exercises would be antidilutive, and the impact of restricted shares.

A reconciliation of weighted average shares used for the basic and diluted computations for the three months ended March 31, 2004 and 2003 is as follows:

Options to purchase 1,610,870 and 4,221,143 shares of common stock were not included in the computation of diluted earnings per share for the three months ended March 31, 2004 and 2003, respectively. Such options have been excluded because the options’ exercise prices were greater than the average market price of the common stock on those dates and, as a result, their effect would have been antidilutive.

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The Company has determined that it has two reportable segments: the domestic segment and the international segment. The Company considers these two segments separately 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 senior management. Income taxes have been allocated to each segment using the Company’s effective tax rate of 39% for the three months ended March 31, 2004 and 2003.

The following table presents information about the Company’s segments for the three months ended March 31, 2004 and 2003: