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 EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number 1-8439
LOJACK CORPORATION
(Exact name of registrant as specified in its charter)
| Massachusetts | 04-2664794 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) | |
| 200 Lowder Brook Drive, Suite 1000 Westwood, Massachusetts |
02090 | |
| (Address of principal executive offices) | (Zip code) | |
(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 16,289,690 shares issued and outstanding of the registrant’s common stock, $.01 par value, as of November 8, 2004.
LOJACK CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
| PAGE | ||
| Part I. Financial Information |
||
| Item 1. Financial Statements (unaudited) |
||
|
Consolidated Condensed Balance Sheets: |
1 | |
|
Consolidated Condensed Statements of Income: |
2 | |
|
Consolidated Condensed Statements of Cash Flows: |
4 | |
| Notes to Unaudited Consolidated Condensed Financial Statements |
5 | |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 | |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
18 | |
| Item 4. Controls and Procedures |
19 | |
| Part II. Other Information |
||
| Item 6. Exhibits and Reports on Form 8-K |
20 | |
| 22 | ||
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except share amounts)
| September 30, 2004 |
December 31, 2003 | ||||||
| (unaudited) | |||||||
| ASSETS |
|||||||
| CURRENT ASSETS: |
|||||||
| Cash and equivalents |
$ | 13,125 | $ | 4,746 | |||
| Accounts receivable - Net |
30,559 | 23,216 | |||||
| Inventories |
10,452 | 10,038 | |||||
| Prepaid expenses and other |
3,228 | 1,520 | |||||
| Deferred income taxes |
3,119 | 2,805 | |||||
| Total current assets |
60,483 | 42,325 | |||||
| PROPERTY AND EQUIPMENT - Net |
13,300 | 14,482 | |||||
| DEFERRED INCOME TAXES |
4,441 | 3,467 | |||||
| OTHER ASSETS - Net |
4,362 | 4,300 | |||||
| TOTAL |
$ | 82,586 | $ | 64,574 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||
| CURRENT LIABILITIES: |
|||||||
| Current portion of capital lease obligations |
$ | 332 | $ | 875 | |||
| Accounts payable |
9,094 | 8,999 | |||||
| Accrued and other liabilities |
4,404 | 2,492 | |||||
| Current portion of deferred revenue |
6,272 | 4,856 | |||||
| Accrued compensation |
3,851 | 3,531 | |||||
| Total current liabilities |
23,953 | 20,753 | |||||
| ACCRUED COMPENSATION |
111 | 272 | |||||
| DEFERRED REVENUE |
17,631 | 14,187 | |||||
| CAPITAL LEASE OBLIGATIONS |
— | 174 | |||||
| TOTAL LIABILITIES |
41,695 | 35,386 | |||||
| STOCKHOLDERS’ EQUITY: |
|||||||
| Preferred stock - $.01 par value; authorized, 10,000,000 shares; none issued or outstanding |
— | — | |||||
| Common stock - $.01 par value; authorized, 35,000,000 shares; issued, 15,601,759 at September 30, 2004 and 14,975,236 at December 31, 2003 |
156 | 150 | |||||
| Additional paid-in capital |
5,391 | 722 | |||||
| Unearned compensation |
(409 | ) | — | ||||
| Accumulated other comprehensive income |
145 | — | |||||
| Retained earnings |
35,608 | 28,316 | |||||
| Total stockholders’ equity |
40,891 | 29,188 | |||||
| TOTAL |
$ | 82,586 | $ | 64,574 | |||
See notes to unaudited consolidated condensed financial statements.
1
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except share and per share amounts)
| THREE MONTHS ENDED SEPTEMBER 30, |
||||||||
| 2004 |
2003 |
|||||||
| (unaudited) | ||||||||
| Revenues |
$ | 38,019 | $ | 33,752 | ||||
| Cost of goods sold |
17,811 | 15,908 | ||||||
| Gross margin |
20,208 | 17,844 | ||||||
| Costs and expenses: |
||||||||
| Product development |
1,314 | 730 | ||||||
| Sales and marketing |
9,084 | 9,053 | ||||||
| General and administrative |
4,302 | 3,437 | ||||||
| Depreciation and amortization |
807 | 561 | ||||||
| Total |
15,507 | 13,781 | ||||||
| Operating income |
4,701 | 4,063 | ||||||
| Other income (expense): |
||||||||
| Interest income |
52 | 38 | ||||||
| Gain on short term investments |
728 | — | ||||||
| Interest expense |
(6 | ) | (26 | ) | ||||
| Total |
774 | 12 | ||||||
| Income before provision for income taxes |
5,475 | 4,075 | ||||||
| Provision for income taxes |
2,141 | 1,589 | ||||||
| Net income |
$ | 3,334 | $ | 2,486 | ||||
| Earnings per share: |
||||||||
| Basic |
$ | 0.22 | $ | 0.17 | ||||
| Diluted |
$ | 0.21 | $ | 0.17 | ||||
| Weighted average shares: |
||||||||
| Basic |
15,501,005 | 14,836,376 | ||||||
| Diluted |
16,192,226 | 15,058,708 | ||||||
See notes to unaudited consolidated condensed financial statements.
2
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except share and per share amounts)
| NINE MONTHS ENDED SEPTEMBER 30, |
||||||||
| 2004 |
2003 |
|||||||
| (unaudited) | ||||||||
| Revenues |
$ | 106,104 | $ | 92,806 | ||||
| Cost of goods sold |
50,550 | 45,003 | ||||||
| Gross margin |
55,554 | 47,803 | ||||||
| Costs and expenses: |
||||||||
| Product development |
4,132 | 2,295 | ||||||
| Sales and marketing |
25,217 | 24,634 | ||||||
| General and administrative |
13,029 | 10,752 | ||||||
| Depreciation and amortization |
2,053 | 1,688 | ||||||
| Total |
44,431 | 39,369 | ||||||
| Operating income |
11,123 | 8,434 | ||||||
| Other income (expense): |
||||||||
| Interest income |
133 | 96 | ||||||
| Gain on short term investments |
728 | — | ||||||
| Interest expense |
(30 | ) | (76 | ) | ||||
| Total |
831 | 20 | ||||||
| Income before provision for income taxes |
11,954 | 8,454 | ||||||
| Provision for income taxes |
4,662 | 3,297 | ||||||
| Net income |
$ | 7,292 | $ | 5,157 | ||||
| Earnings per share: |
||||||||
| Basic |
$ | 0.48 | $ | 0.35 | ||||
| Diluted |
$ | 0.46 | $ | 0.35 | ||||
| Weighted average shares: |
||||||||
| Basic |
15,254,678 | 14,783,442 | ||||||
| Diluted |
15,810,666 | 14,862,980 | ||||||
See notes to unaudited consolidated condensed financial statements.
3
LOJACK CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
| NINE MONTHS ENDED SEPTEMBER 30, |
||||||||
| 2004 |
2003 |
|||||||
| (unaudited) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net income |
$ | 7,292 | $ | 5,157 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Deferred revenue recognized |
(4,291 | ) | (10,024 | ) | ||||
| Deferred revenue additions |
9,147 | 13,024 | ||||||
| Stock-based compensation |
99 | — | ||||||
| Depreciation and amortization |
3,242 | 3,324 | ||||||
| Provision for doubtful accounts |
(57 | ) | 104 | |||||
| Deferred income taxes |
(1,288 | ) | (520 | ) | ||||
| Gain on disposal of fixed assets |
(335 | ) | (517 | ) | ||||
| Increase (decrease) in cash from changes in assets and liabilities: |
||||||||
| Accounts receivable |
(7,242 | ) | (4,666 | ) | ||||
| Inventories |
(358 | ) | (900 | ) | ||||
| Prepaid expenses and other |
(1,706 | ) | 1,562 | |||||
| Prepaid income taxes |
— | 219 | ||||||
| Other assets |
(108 | ) | 122 | |||||
| Accounts payable |
112 | (2,486 | ) | |||||
| Accrued and other liabilities |
2,078 | 1,981 | ||||||
| Net cash provided by operating activities |
6,585 | 6,380 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Expenditures for property and equipment - net |
(2,040 | ) | (3,681 | ) | ||||
| Proceeds from sale of fixed assets |
361 | 526 | ||||||
| Investment in foreign licensee |
— | (410 | ) | |||||
| Net cash used for investing activities |
(1,679 | ) | (3,565 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Exercise of stock options |
3,733 | 194 | ||||||
| Issuance of shares under employee stock purchase plan |
433 | 288 | ||||||
| Repayment of capital lease obligations |
(717 | ) | (1,163 | ) | ||||