LoJack Corporate Backgrounder

LoJack Corporation (NASDAQ: LOJN), the premier worldwide provider of tracking and recovery systems, created the stolen vehicle recovery category more than two decades ago.  Since then, the company has earned a reputation as the global leader in the market.  From its inception, LoJack’s primary core strengths and market differentiators have been its use of Radio Frequency (RF) technology, which is proven to be the best technology for tracking and recovery, and the System’s direct integration with law enforcement agencies across the nation.  These key advantages have enabled LoJack to deliver a 90 percent success rate—the best recovery rate in the business—amounting to more than $5 billion in recovered global assets.

Today, LoJack’s core business comprises the tracking and recovery of a variety of valuable mobile assets that include not only cars and trucks, but also construction equipment, commercial vehicles and motorcycles – all of which leverage the company’s unrivaled recovery solutions and direct integration with law enforcement.  The company also has continued to expand and diversify its business.  In 2005, LoJack established a licensing agreement with Absolute Software to offer LoJack for Laptops.  In 2006, LoJack made a strategic investment in SC-Integrity, making inroads into the emerging cargo security arena.  And in 2008, LoJack acquired Locator Systems Corporation, which gave LoJack the ability to expand its recovery capabilities to help locate and recover people at risk. This technology is currently used by the non-profit organization Project Lifesaver, which helps locate and rescue missing persons who wander due to Alzheimer’s, Autism, Dementia or Down syndrome.

Today, LoJack offers systems in 27 states and the District of Columbia, and more than 30 countries around the globe. Now, through its systems, licensing agreements, investments and acquisitions, the company enables a wide range of recoveries – from mobile assets to missing persons.

The LoJack Difference
LoJack offers the right technology and processes to deliver the most effective solutions to the serious global problem of mobile asset theft.  LoJack’s systems for cars, trucks, construction equipment, commercial vehicles and motorcycles are based on time-tested RF technology that is highly covert and highly effective—even if the asset is in a steel container, garage, hidden under dense foliage or in a chop shop. 

Another key differentiator is LoJack’s unique and long standing relationship with law enforcement agencies throughout the U.S., and in most countries where the company has licensees.  The LoJack System was created specifically to operate within the processes and procedures of law enforcement to provide a highly effective, turnkey method for system activation and asset recovery.  In the U.S., LoJack software and databases are directly integrated with each state’s crime computers, which expedite activation and tracking.  Additionally, LoJack’s Police Tracking Computers (PTCs) are installed in law enforcement vehicles, helicopters and fixed-wing aircraft to optimize tracking and recovery. Through the PTCs, a stolen asset communicates its whereabouts to authorities in real-time via RF technology that is emitted from the transponder hidden in the stolen asset.  This vehicle-to-vehicle communication delivers unprecedented precision in “last mile” tracking, which is optimal for recovery.  Additionally, LoJack has a distinctive staff of Law Enforcement Liaisons, all former police officers with a specialization in vehicle theft prevention who work with law enforcement agencies in the fight against theft. 

LoJack’s tried and true process places recovery directly in the hands of law enforcement where it belongs.  Many law enforcement professionals also acknowledge it as the optimal method for the recovery of these types of assets.   Because of the system’s effectiveness, LoJack guarantees vehicle recovery with a 100 percent money-back promise.

Solid Long-Term Strategies
LoJack has focused its efforts over the past several years on diversifying its overall business and refining its domestic business model.  The company has made significant inroads into new arenas like the motorcycle market, added new states to its footprint, and broadened its operations model to include a variety of vehicle installation options.

Additionally, the company continues to invest in strengthening its already well-known brand—which over time has become part of the nation’s vernacular.  In 2008, LoJack began a new brand awareness campaign complete with cable television advertising and an emphasis on new media in the U.S.
The company’s refined business model, diversification into new markets, emphasis on its brand—along with its key differentiators—are leading LoJack to evolve its vision of the future.  In tandem with that, LoJack continues to pursue strategies that enhance its leadership in the automotive market. 

Automotive Channel:
LoJack has focused much of its time and resources over the past few years on retooling its sales, marketing, distribution and installation processes—all of which have made it easier for automotive dealers to do business with the company.  LoJack instituted programs designed to increase efficiency and help drive revenue in the dealer channel including its Bulk Install, Certified Dealer Installation and Third Party Installation initiatives. These programs have provided dealers with increased revenue opportunities, as well as a means of better servicing their customers. These efforts have put LoJack in a strong position with dealers that are renewing their focus on driving profit through aftermarket sales. 
 

Motorcycle Channel:
The popularity of bike riding remains high.  As such, it is no surprise that motorcycle theft has risen at an alarming rate over the past few years**.   The National Insurance Crime Bureau (NICB) reported that more than 71,000 motorcycles were stolen in 2006—nearly a 137 percent increase since the year 2000.  The popularity of biking and the rapid rise in theft are two factors that have made LoJack For Motorcycles the right product for this serious problem.  In fact, in 2006 LoJack For Motorcycles led police to recover more than $8 million in LoJack equipped motorcycles since 2005.

In 2007 LoJack began rolling out its Early Warning System for Motorcycles in key markets.  The Early Warning System notifies an owner if his/her motorcycle is moved without permission, enabling owners to immediately contact police.

LoJack For Motorcycles has captured the attention of the insurance industry, as well as bike enthusiasts.  This year, two new major motorcycle insurers, GEICO and Progressive, have joined with Foremost Insurance Group and Rider Insurance to provide incentives for policy holders who have LoJack For Motorcycles installed on their bikes.

LoJack For Motorcycles is not only helping bike enthusiasts get back their stolen motorcycles and potentially save money on their insurance, the system also has been instrumental in uncovering emerging trends in motorcycle theft, such as the online sale of stolen bike parts. 

Commercial/Construction Channel:
Theft of construction equipment is also a large and growing problem, with annual losses totaling $1 billion nationwide according to NICB.  Construction equipment theft is a low risk, high reward crime.  Equipment is often located on remote, unsecured job sites and typically carries a high price tag, making it a profitable venture for organized crime rings. 

In today’s economy, with building starts at an all-time low, it is especially important to protect costly equipment from theft.  In an effort to provide equipment owners with powerful theft protection and enhanced return on investment on their equipment, LoJack introduced LoCate + LoJack, a comprehensive solution that provides asset management capabilities plus LoJack’s time-tested recovery system.  LoCate + LoJack utilizes the optimal technology for each specific application: GPS/Cellular Assist for asset management and time-tested Radio Frequency for stolen vehicle recovery.  The LoCate + LoJack solution is the newest addition to the company’s Ruggedized product line designed for heavy equipment and commercial vehicles. 

LoJack's ongoing efforts to broaden and deepen its penetration in the commercial channel are focused on two key objectives: making new inroads with smaller organizations and expanding relationships with larger commercial players.  Additionally, the company is committed to making enhancements to its Ruggedized products to constantly meet the changing needs of this market segment.  

Widening the Scope of Recovery
LoJack continues to broaden its definition of valuable mobile assets beyond its traditional cars, trucks, construction equipment and motorcycles. 

LoJack’s licensing agreement with Absolute Software to market LoJack for Laptops, further enhances LoJack’s powerful brand identity as the leader for effective tracking and recovery—adding computers to its growing list of valuable mobile assets. 

LoJack’s investment in SC-Integrity heralded the company’s entrée into the emerging and potentially sizeable cargo security market with a partner that offers both security experience and a comprehensive supply chain solution that is well known and highly respected.  As part of the agreement, LoJack licensed the LoJack brand name to SC-Integrity, which is marketing its current tracking and recovery service as LoJack inTransit.  Working in conjunction with LoJack, SC-Integrity is evolving and expanding its business model to offer new solutions for other applications in which valuable assets are at risk during transport. 

LoJack recently acquired Locator Systems Corporation, which gives LoJack the potential to expand its recovery capabilities to help locate and recover people, beginning with missing persons who wander due to Alzheimer’s, Autism, Dementia or Down syndrome. 

LoJack is currently assessing other possible applications enabled by the Locator technology. 

Continued Driver of Growth: International Business
LoJack’s Global Network – which includes 28 licensees in countries in North America, Latin America, Europe, Africa and Asia – in 2007 for the first time outpaced unit sales of LoJack Systems in the domestic market. As such, the international arena is a continued driver of LoJack's growth.  Vehicle theft remains a very serious problem in Latin America and LoJack products are more relevant there than ever.  South Africa is another area of high vehicle theft and a strong growth market for LoJack, followed by the European region.

In Italy, a company-owned operation, LoJack has strengthened the infrastructure to operate the LoJack network throughout key regions and formed solid relationships with law enforcement. In 2008 the company is focusing on building its sales force and working to increase insurance mandates, as well as enhance its distribution network.

LoJack continues to explore opportunities in China—a market that holds potential growth opportunities. 
 
Boomerang, which LoJack acquired in 2004, began rolling out Espion in 2006, a next-generation tracking technology based on its cellular model.  This product is helping Boomerang partner more effectively with insurance companies.  This year Boomerang will complete the analog-to-digital transition and will work to further penetrate the auto dealer market in Ontario, using the LoJack domestic business model. 

Key Initiatives: Technology and Products
Radio Frequency has withstood the test of time as the best technology for tracking and recovering mobile assets with unprecedented “last mile” precision.  As such, RF continues to be the core underlying technology for LoJack Systems for cars, trucks, construction equipment, commercial vehicles and motorcycles. 

As LoJack embarks on new ventures, such as the cargo security arena, the company is evaluating other technologies that may be used in combination with RF—all with the goal of leveraging the best possible mix of technologies for each individual market and application. And, as the company looks to the future, it is also evaluating new applications, products and services that may further broaden or even redefine the recovery market.

The Knowledge Center: An Education Destination for Theft Protection Information
Educating consumers about the nationwide problem of mobile asset theft is a high priority at LoJack.  To help people learn what it takes to properly safeguard their cars, trucks, motorcycles and construction equipment, LoJack has created The Knowledge Center—an online destination residing on the newly redesigned LoJack website that provides Fast Facts, Surveys, Studies & Stats and Tips & Tools.  There, LoJack also offers a series of theft protection booklets that can be downloaded from the site.  The booklets include: “Street Smarts,” which is aimed at owners of cars, trucks and SUVs; “Bike Smarts,” which is designed for motorcycle enthusiasts; “Site Smarts,” which addresses protection of commercial equipment; “Teen Smarts,” geared for new drivers and parents of new drivers; and "Get in the Know," which was developed by LoJack and NICB for all vehicle owners.  The Knowledge Center can be accessed from  www.lojack.com.

Beginning in the summer of 2007, LoJack and the NICB, the nation’s leading not-for-profit organization dedicated to fighting insurance fraud and vehicle theft, launched a joint education initiative called the Vehicle Theft Protection Program. Since July is one of the highest vehicle theft months of the year, the program kicked off by naming July as “National Vehicle Theft Protection Month.”  As part of the program, LoJack and NICB offer a variety of valuable information on vehicle theft protection that is available on their websites

LoJack: Ever More Vital in Today’s World
The strength of LoJack’s business model indicates that the company’s core competencies are more relevant than ever in today’s world.  LoJack has the right processes, people and technologies to make its offerings the most effective solutions that support a wide range of recoveries—from mobile assets to missing persons.

Moreover, the company has the flexibility and opportunistic mindset to diversify its business by pursuing additional, emerging markets that expand LoJack’s reach into new areas and continue to build its strong brand as the global leader in recovery products and services. 

Today, the management team, headed by Richard T. Riley, Chairman; and Ronald V. Waters, President and Chief Executive Officer, has expanded the company’s domestic business model, reinvigorated its global network of licensees and made strategic investments in a number of critical areas to assure that LoJack is in a solid position for the future.

The management team has an equally strong focus on strengthening the LoJack brand and owning “all things recovery” to maintain the leadership position it has built over the past two decades and develop products and services that will create new leadership opportunities in the future.

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* 2003 Gallup Survey
**Latest available figure