Analyst: Victor Sula, Ph.D.

Initial Report
January 2nd. 2009

LOJN daily 1/02/09

6.0

5.5

5.0

4.5

4.0

3.5

3.0

volume © BigCharts.com
400

Thousands
300

200

100

0
Nov Dec

MARKET DATA

Share Statistics NASDAQ 2006 2007 %Chg 9m 9m %Chg

(12/23/08) 2007 2008
Symbol LOJN Revenues, $ Mn. 213.3 222.7 4.4% 167.4 150.5 -10.1%
Current Price $4.12 Gross margin 53.1% 55.7% 2.6% 56.6% 53.1% -3.6%
Low/ High 52 weeks 3.21 - 16.95 Operating margin 11.0% 13.6% 2.6% 16.0% -19.9% -35.9%
Average Volume (3m) 72,311 Net margin 7.7% 9.6% 1.9% 11.4% -21.7% -33.1%
Market Capitalization $71.48 Mn
Shares Outstanding 17.35 Mn Diluted EPS, $ $0.86 $1.13 n/m $1.00 ($1.88) n/m

Source: Yahoo Finance, Analyst Estimates

Background
LOJN is a leading provider of technology products and services for the track-
ing and recovery of valuable mobile assets. LOJN created the stolen vehicle
recovery category more than 20 years ago and has earned a 90% recovery suc-
cess rate. Globally, more than 250,000 stolen assets worth more than $5 billion
have been recovered using LOJN’s technology.

The Company operates in 26 states and the District of Columbia in the U.S.,
and in more than 30 countries throughout Europe, Africa, North America,
South America and Asia.

LOJN is primarily selling tracking units that help its customers locate sto-
len or lost mobile assets. It has integrated its systems with law enforcement
agencies, has several regional networks in place (to detect stolen assets once a
unit has been reported stolen), and uses its FCC licensed radio frequency and
proprietary technology that can find assets that are hidden from view (unlike

LoJack Corporation (Nasdaq: LOJN) 1

 Analyst: Victor Sula, Ph.D.
Initial Report
January 2nd. 2009

GPS systems), all of which make it difficult for competitors to replicate the Company’s business.

LOJN has three separately managed and reported business segments: domestic, international and Boomerang.
LOJN’s domestic and international revenue is derived primarily from the sale of LoJack Units, LoJack Early
Warning Units, and related products and services to the clients in the U.S and worldwide. Boomerang revenue
is derived primarily from the sale and installation of Boomerang Systems, which are based on RF and cellular
technology, and uses the Company’s internally developed tracking devices and the wireless networks of major
regional telecommunications companies for locating and tracking stolen assets. The cellular coverage area for
Boomerang’s tracking of stolen assets includes most of North America; however, its service area is primarily in
Canada.

Highlights

Solid history of growth

The Company reported solid growth over the last five years with revenue exceeding $222 million in 2007. The
revenue growth was driven mainly by the rapid international expansion of the Company and diversification
from initial reliance on vehicles to various types of valuable assets: equipment, motorcycles, laptops or persons
with cognitive disabilities.

Revenue, $ Mn

Source : SEC Filings

Competitive advantages over GPS for stolen vehicle recovery

Unlike systems based on GPS, including technology such as OnStar®, LOJN technologies can penetrate build-
ings and containers for the effective tracking and recovery of stolen mobile assets hidden from view. The Compa-
ny’s offering differs from GPS products in that its products are covert without any visible antennas or markings
on the vehicle indicating presence of the LoJack System. Additionally, the direct integration of the LoJack System
with law enforcement in the U.S. results in the automatic activation of the LoJack Unit upon the vehicle owner’s
report of the theft to police; no third-party intermediaries are involved in the activation or tracking process.

LoJack Corporation (Nasdaq: LOJN) 2

 Analyst: Victor Sula, Ph.D.
Initial Report
January 2nd. 2009

International diversification attenuated the 2008 decline of LOJN’s domestic revenue

Revenue for the nine months ended September 30, 2008, decreased by 10%, as compared to the same period a year
ago. The revenue decline was caused mainly by the financial crisis, which led to a credit freeze, worldwide liquid-
ity problems and decreased consumer confidence. The U.S. domestic auto industry is experiencing its worst year
in almost 16 years, with annual new car sales projected to be approximately 13 million to 13.5 million units in both
2008 and 2009, compared to new car sales of more than 16 million units in 2007.

Revenue related to international segment increased by 16% for the first nine months of 2008, as compared to the
same period a year ago. The Company’s international unit volume was 14% higher when compared to the same
period one year ago.

Revenue segments, $ Mn

Source : SEC Filings

Better gross margins on a sequential basis due to international diversification

The Company’s Q3 2008 gross margins were the highest since Q3 2007, mainly due to strong growth of interna-
tional sales. The Company succeeded to obtain better pricing due to reaching 2008 purchasing targets under vol-
ume purchase arrangements. Gross margins of domestic segment have worsened in the last quarters as a result of
lower domestic dealer volumes.

2009

LoJack Corporation (Nasdaq: LOJN) 3

 Analyst: Victor Sula, Ph.D.
Initial Report
January 2nd. 2009

Gross Margin, %

Source : SEC Filings

Impairment of intangible long-lived assets has made LOJN to report loses in 2008

The impairment of certain intangible long-lived assets combined with lower domestic sales and the economic
slowdown has adversely impacted LOJN’s business. On a pro-forma basis, the Company’s EPS declined 63%.
Concomitantly for fiscal 2008 LOJN’s management has lowered its guidance and expects revenue to be between
$199 million and $202 million, pro forma net income to be between $8.5 million and $9.5 million, pro forma earn-
ings per fully diluted share to be between $0.50 and $0.53.

Profitability ratios

9 mo 2007 9 mo 2008 % Chg

Revenue, $ Mn 167.4 150.5 -10.1%

Gross margin, % 56.6% 53.1% -3.6%

Operating margin, %
As reported 16.0% -19.9% -35.9%
Pro-forma 16.0% 5.4% -10.6%

Net Margin, %
As reported 11.4% -21.7% -33.1%
Pro-forma 11.4% 2.9% -8.4%

EPS, $
As reported 1.04 -1.88 n/m

Source: SEC Filings

LoJack Corporation (Nasdaq: LOJN) 4

 Analyst: Victor Sula, Ph.D.
Initial Report
January 2nd. 2009

Strong balance sheet

LOJN has a strong balance sheet with cash and short-term investment of $66.2 million and a total debt of $27 mil-
lion. Despite negative earnings, the Company reported positive cash flows from operations that neared $13 mil-
lion for the first nine months of 2008.

Selected balance sheet data, $ Mn

31-Dec-07 30-Sep-08

Total Assets, including 245.8 203.2

Cash and short-term investment 71.2 66.3

Liabilities, including 117.5 122.8

Debt 26.5 27.2
Equity 128.3 80.4

Source : SEC Filings

Leadership changes to continue the transition to profitability

On December 11, 2008, the LOJN’s board of directors promoted Ronald V. Waters, III to president and CEO, effec-
tive as of January 1, 2009. Mr. Waters served as the Company’s president and COO since joining the Company in
February 2007. Richard T. Riley, the Company’s current chairman and CEO, will remain with the Company full
time and serve as the Company’s executive chairman of the board, effective January 1, 2009.

Prior to joining the Company, Mr. Waters, served as COO for the Wm. Wrigley Jr. Company from December 2003
through May 2006. He joined the Wm. Wrigley Jr. Company in 1999 as CFO and served as CFO until his elevation
to COO in 2003. Prior to joining the Wm. Wrigley Jr. Company, Mr. Waters held several senior executive positions
of increasing responsibility with The Gillette Company.

Investment sentiment

LoJack Corporation is a leading provider of wireless tracking and recovery systems for mobile assets with solid
history of growth and global presence. The Company’s revenue is likely to decline by 10% in 2008 due to tough
conditions in the U.S. auto industry. However, we appreciate this downturn as temporary and LOJN should re-
cover in 2009.

The Company’s initiatives to diversify its business internationally is paying off: international sales were up 40%
in Q3 2008 as LOJN entered new markets, which softened the drop in domestic demand that occurred due to the
slower pace of new vehicle sales. LOJN is also leveraging its technology on other valuable assets like construction
equipment, laptops, motorcycles, as well as for persons with cognitive disabilities thus decreasing reliance on ve-
hicles. LOJN is not dependent on any car manufacturer. Individuals purchasing vehicles or insurance companies
regardless of maker make the LoJack Unit purchase decisions.

LoJack Corporation (Nasdaq: LOJN) 5

 Analyst: Victor Sula, Ph.D.
Initial Report
January 2nd. 2009

The Company is traded at 9.0 times 2009 EPS and 0.35 times 2009 revenue estimate. We believe the Company
deserves better valuation given its solid offering that make it difficult for competitors to copy, solid revenue
growth prospects due to successful diversification strategy, and solid balance sheet with more cash than debt.
As a result we rate LOJN as a “Buy.”

LoJack Corporation (Nasdaq: LOJN) 6

 Analyst: Victor Sula, Ph.D.
Initial Report
January 2nd. 2009

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I, Victor Sula, Ph.D, the author of this report, certify that the material and views presented herein represent my personal opinion regarding the content and securities included in this
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Victor Sula, Ph.D. - Senior Analyst

Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004, Mr. Sula held Senior Financial Consultant posi-
tions within the World Bank sponsored Agency for Restructuring and Enterprise Assistance and TACIS sponsored Center for Productivity and Competitiveness of Moldova, where
he was involved in corporate reorganization and liquidation. He is also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D.
degree in 2001 and bachelor’s degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level III candidate in the CFA program.

LoJack Corporation (Nasdaq: LOJN) 7