NOTE 2 – ACQUISITIONS

Radio Satellite Integrators acquisition

On December 18, 2013, the Company completed the acquisition of all outstanding capital stock of Radio Satellite Integrators, Inc. (“RSI”) for a cash payment at closing of $6.5 million and future earn-out payments based on post-acquisition sales and gross profit performance in the aggregate estimated fair value amount of $2.1 million that is payable quarterly over two years. RSI was a privately-held provider of fleet management solutions primarily to city and county government agencies for applications involving public works, waste management, transit and public safety.

Following is the purchase price allocation for RSI (in thousands):

Purchase price				$	8,563
Less cash acquired					(382	)
Net purchase price					8,181
Fair value of net assets acquired:
Current assets other than cash	$	941
Customer lists		3,150
Developed/core technology		1,970
Other non-current assets		10
Current liabilities		(1,675	)
Deferred tax liabilities, net		(1,768	)
Total fair value of net assets acquired					2,628
Goodwill				$	5,553

This goodwill is primarily attributable to the benefit of having an assembled workforce to address the Company's governmental markets and the value that the Company expected to derive from RSI's customer relationships beyond the current contractual terms of these service agreements. The goodwill arising from this acquisition is not deductible for income tax purposes.

Wireless Matrix acquisition

On March 4, 2013, the Company completed the acquisition of all outstanding capital stock of Wireless Matrix USA, Inc. (“Wireless Matrix”). Under the terms of the agreement, the Company acquired Wireless Matrix for a cash payment of $52.9 million. The assets acquired by the Company included cash of approximately $6.1 million. The Company funded the purchase price from the net proceeds of an equity offering in February 2013 of $44.8 million, the $3.2 million net proceeds from a bank term loan, and cash on hand.

Following is the purchase price allocation for Wireless Matrix (in thousands):

Purchase price				$	52,986
Less cash acquired					(6,149	)
Net cash paid					46,837
Fair value of net assets acquired:
Current assets other than cash	$	6,353
Deferred tax assets, net		9,437
Property and equipment		1,683
Customer lists		14,440
Developed/core technology		11,180
Other non-current assets		144
Current liabilities		(5,218	)
Total fair value of net assets acquired					38,019
Goodwill				$	8,818

The Company paid a premium (i.e., goodwill) over the fair value of the net tangible and identified intangible assets acquired. A principal rationale for this acquisition is that the Company could leverage Wireless Matrix's mobile workforce management and asset tracking applications to build upon its current product offerings for its customers in the energy, government and transportation markets and expand its turnkey offerings to global enterprise customers in new vertical markets such as heavy equipment and insurance telematics, among others. The Company believes that this acquisition accelerated its development roadmap, thereby enabling it to offer higher margin turnkey solutions for new and existing customers, and further enhanced its relevance with mobile network operators and key channel partners in the global M2M marketplace. The goodwill arising from the Wireless Matrix acquisition is not deductible for income tax purposes.

Following is unaudited supplemental pro forma information for fiscal 2013 presented as if the acquisition had occurred on March 1, 2012 (in thousands):

	Consolidated revenues	$	208,219
	Consolidated net income	$	37,467

The pro forma financial information is not necessarily indicative of what the Company's actual results of operations would have been had Wireless Matrix been included in the Company's historical consolidated financial statements for the year ended February 28, 2013. In addition, the pro forma financial information does not attempt to project the future results of operations of the combined company.

The pro forma adjustments for the year ended February 28, 2013 consisted of adding Wireless Matrix's results of operations for the 12-month periods ended January 31, 2013 to the Company's reported financial results for such year. The pro forma net income above includes additional amortization expense of $4,751,000 related to the fair value of identifiable intangible assets arising from the purchase price allocation. In addition, the number of shares used in computing pro forma earnings per share includes 5,175,000 common stock shares issued in February 2013 to fund the acquisition of Wireless Matrix, as if such shares were outstanding during the entire year ended February 28, 2013.

Navman Supply Agreement and acquisition

On May 7, 2012, the Company entered into a five-year supply agreement (the “Supply Agreement”) to provide at least $25 million of fleet tracking products to Navman Wireless, a privately held company (“Navman”). In addition, the Company concurrently entered into a product line acquisition agreement with Navman (the “Asset Purchase Agreement”) and established a research and development center in Auckland, New Zealand with an initial staff of 14 employees who transferred from Navman's workforce.

The purchase price for the products and technologies acquired from Navman pursuant to the Asset Purchase Agreement was $4,902,000, comprised of $1,000,000 paid in cash at closing, a non-interest bearing note payable with a present value of $3,080,000 at the time of issuance, and the fair value of estimated contingent royalties consideration of $822,000 for sales by CalAmp during the first three years of certain products acquired from Navman under the Asset Purchase Agreement. The note payable has a face value of $4,000,000, and is payable in the form of a 15% rebate on certain products sold by the Company to Navman under the Supply Agreement.

Following is the purchase price allocation for the Navman Asset Purchase Agreement (in thousands):

Purchase price				$	4,902
Fair value of net assets acquired:
Property and equipment	$	200
Supply contract		2,220
Developed/core technology		500
Customer lists		710
Covenants not to compete		170
Assumed liabilities		(10	)
Total fair value of net assets acquired					3,790
Goodwill				$	1,112

This goodwill is primarily attributable to the benefit of having an assembled workforce in New Zealand and the value that the Company expects to receive from the Supply Agreement beyond its five year term. The goodwill arising from this acquisition is deductible for income tax purposes.