0001206774-16-007284.txt : 20160929 0001206774-16-007284.hdr.sgml : 20160929 20160929161330 ACCESSION NUMBER: 0001206774-16-007284 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 80 CONFORMED PERIOD OF REPORT: 20160831 FILED AS OF DATE: 20160929 DATE AS OF CHANGE: 20160929 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CalAmp Corp. CENTRAL INDEX KEY: 0000730255 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 953647070 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12182 FILM NUMBER: 161910139 BUSINESS ADDRESS: STREET 1: 15635 ALTON PARKWAY, SUITE 250 CITY: IRVINE STATE: CA ZIP: 92618 BUSINESS PHONE: 9496005600 MAIL ADDRESS: STREET 1: 15635 ALTON PARKWAY, SUITE 250 CITY: IRVINE STATE: CA ZIP: 92618 FORMER COMPANY: FORMER CONFORMED NAME: CALIFORNIA AMPLIFIER INC DATE OF NAME CHANGE: 19920703 10-Q 1 calamp29882137-10q.htm QUARTERLY REPORT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)

     

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

     

For the quarterly period ended August 31, 2016

     

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: 0-12182
________________

CALAMP CORP.
(Exact name of Registrant as specified in its Charter)

Delaware 95-3647070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
 
15635 Alton Parkway, Suite 250
Irvine, California 92618
(Address of principal executive offices) (Zip Code)

(949) 600-5600
(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    No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

(Do not check if a smaller reporting company)


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No

The number of shares outstanding of the registrant’s common stock as of September 23, 2016 was 36,332,377.



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CALAMP CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited; amounts in thousands, except par value)

      August 31,       February 29,
2016 2016
Assets
Current assets:
       Cash and cash equivalents $       94,705 $        139,388
       Short-term marketable securities 22,299 88,718
       Accounts receivable, less allowance for doubtful accounts of $691
              and $622 at August 31, 2016 and February 29, 2016, respectively   68,766 49,432
       Inventories 27,999 16,731
       Prepaid expenses and other current assets 7,314 4,498
                     Total current assets   221,083 298,767
Property, equipment and improvements, net of
       accumulated depreciation and amortization 21,599 11,225
Deferred income tax assets 28,604 30,213
Goodwill 63,180 16,508
Other intangible assets, net 74,916 17,010
Other assets 10,777 10,640
$ 420,159 $ 384,363
Liabilities and Stockholders' Equity
Current liabilities:
       Accounts payable $ 36,604 $ 24,938
       Accrued payroll and employee benefits 10,800 6,814
       Deferred revenue 16,855 9,438
       Other current liabilities 17,945 8,375
                     Total current liabilities 82,204 49,565
1.625% convertible senior unsecured notes 143,260 139,800
Other non-current liabilities 13,500 5,551
                     Total liabilities 238,964 194,916
 
Commitments and contingencies
 
Stockholders' equity:
       Preferred stock, $.01 par value; 3,000 shares authorized;
              no shares issued or outstanding - -
       Common stock, $.01 par value; 80,000 shares authorized;
              36,419 and 36,667 shares issued and outstanding
              at August 31, 2016 and February 29, 2016, respectively 364 367
       Additional paid-in capital 223,680 229,159
       Accumulated deficit (41,991 ) (39,853 )
       Accumulated other comprehensive loss (858 ) (226 )
                     Total stockholders' equity 181,195 189,447
$ 420,159 $ 384,363

See accompanying notes to consolidated financial statements.

2



CALAMP CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited; in thousands, except per share amounts)

Three Months Ended Six Months Ended
August 31, August 31,
      2016       2015       2016       2015
Revenues:
       Products $      75,984 $      58,498 $      152,405 $      113,295
       Application subscriptions and other services 14,495 11,310 29,221 21,942
              Total revenues 90,479 69,808 181,626 135,237
 
Cost of revenues:
       Products 45,486 39,223 94,375 76,560
       Application subscriptions and other services 7,379 5,282 14,803 9,848
              Total cost of revenues 52,865 44,505 109,178 86,408
 
Gross profit 37,614 25,303 72,448 48,829
 
Operating expenses:
       Research and development   5,885 4,995 11,976 9,560
       Selling 12,683 5,847 23,991 11,345
       General and administrative 11,284 4,908 27,267 9,683
       Intangible asset amortization 3,856 1,655 7,346 3,299
Total operating expenses 33,708 17,405 70,580 33,887
 
Operating income 3,906 7,898 1,868 14,942
 
Non-operating income (expense):
       Investment income (loss) 455 (43 ) 908 (15 )
       Interest expense (2,474 ) (2,280 ) (4,898 ) (2,928 )
       Other income (expense) (130 ) (18 ) 413 (29 )
  (2,149 ) (2,341 ) (3,577 ) (2,972 )
 
Income (loss) before income taxes and equity
       in net loss of affiliate
1,757 5,557 (1,709 ) 11,970
 
Income tax benefit (provision) (864 ) (2,058 ) 255 (4,412 )
 
Income (loss) before equity in net loss of affiliate 893 3,499 (1,454 ) 7,558
 
Equity in net loss of affiliate (372 ) - (684 ) -
 
Net income (loss) $ 521 $ 3,499 $ (2,138 ) $ 7,558
 
Earnings (loss) per share:
       Basic $ 0.01 $ 0.10 $ (0.06 ) $ 0.21
       Diluted $ 0.01 $ 0.10 $ (0.06 ) $ 0.21
 
Shares used in computing earnings (loss) per share:
       Basic 36,390 36,135 36,425 36,049
       Diluted 36,849 36,716 36,425 36,691
 
Comprehensive income (loss):
       Net income (loss) $ 521 $ 3,499 $ (2,138 ) $ 7,558
       Other comprehensive loss:
              Foreign currency translation adjustments (109 ) - (624 ) -
              Unrealized loss on equity investment in French        
                     licensee, net of tax (16 ) - (8 ) -
Total comprehensive income (loss) $ 396 $ 3,499 $ (2,770 ) $ 7,558

See accompanying notes to consolidated financial statements.

3



CALAMP CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; amounts in thousands)

Six Months Ended
August 31,
2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net income (loss) $        (2,138 ) $        7,558
Adjustments to reconcile net income (loss) to net cash
       provided by operating activities:  
       Depreciation expense 4,032 1,675
       Intangible assets amortization expense         7,346 3,299
       Stock-based compensation expense 3,605 2,609
       Amortization of convertible debt issue costs and discount 3,460 2,019
       Foreign currency remeasurement gains (460 ) -
       Deferred tax assets, net (1,091 ) 4,106
       Equity in net loss of affiliate 684 -
       Impairment of internal use software 1,364 -
       Other         14 7
       Changes in operating assets and liabilities:
              Accounts receivable 1,814 2,115
              Inventories 2,043 (3,906 )
              Prepaid expenses and other assets 2,818 257
              Accounts payable 1,929 9,487
              Accrued liabilities (6,864 ) 1,185
              Deferred revenue 760 (1,649 )
NET CASH PROVIDED BY OPERATING ACTIVITIES 19,316 28,762
 
CASH FLOWS FROM INVESTING ACTIVITIES:
       Proceeds from maturities of marketable securities 66,419 6,634
       Purchases of marketable securities - (114,010 )
       Capital expenditures (3,527 ) (2,576 )
       Acquisition of Crashboxx - (1,500 )
       Acquisition of LoJack, net of cash acquired (116,982 ) -
       Advances to affiliate (737 ) -
       Other (36 ) -
NET CASH USED IN INVESTING ACTIVITIES (54,863 ) (111,452 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
       Proceeds from issuance of convertible senior notes - 172,500
       Payment of debt issuance costs - (5,291 )
       Purchase of convertible note hedges         - (31,343 )
       Proceeds from issuance of warrants - 15,991
       Payment of acquisition-related note and contingent consideration - (1,262 )
       Repurchases of common stock (8,451 ) -
       Taxes paid related to net share settlement of vested equity awards (1,416 ) (2,478 )
       Proceeds from exercise of stock options 780 487
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (9,087 ) 148,604
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH (49 ) -
 
Net change in cash and cash equivalents (44,683 ) 65,914
Cash and cash equivalents at beginning of period 139,388 34,184
Cash and cash equivalents at end of period $ 94,705 $ 100,098

See accompanying notes to consolidated financial statements.

4



CALAMP CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 THREE AND SIX MONTHS ENDED AUGUST 31, 2016 AND 2015

NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

CalAmp Corp. (“CalAmp” or the “Company”) is a leading provider of wireless communications solutions for a broad array of applications to customers globally. The Company’s business activities are organized into its Wireless DataCom and Satellite business segments.

In March 2016, the Company completed the acquisition of all outstanding shares of common stock of LoJack Corporation (“LoJack”), a global leader in products and services for tracking and recovering cars, trucks and other valuable mobile assets. See Note 2 for a description of this acquisition.

Up to and including the quarter ended August 31, 2016, products of the Company's Satellite segment were sold to EchoStar, an affiliate of Dish Network, for incorporation into complete subscription satellite television systems. In April 2016, EchoStar notified the Company that it would stop purchasing products from the Company at the end of its then-current product demand forecast as a result of a consolidation of its supplier base. EchoStar’s product demand forecast with the Company extended through August 2016, and the products covered by this forecast were substantially all shipped prior to August 31, 2016. In light of the fact that EchoStar accounted for essentially all of the revenues of the Satellite segment, the Company’s Satellite business was shut down effective August 31, 2016.

Certain notes and other information included in the Company’s Annual Report on Form 10-K are condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the Company’s 2016 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on April 20, 2016.

In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the Company’s financial position at August 31, 2016 and its results of operations for the three and six months ended August 31, 2016 and 2015. The results of operations for such periods are not necessarily indicative of results to be expected for the full fiscal year.

All significant intercompany transactions and accounts have been eliminated in consolidation.

Revenue Recognition

The Company recognizes revenue from product sales when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection of the sales price is reasonably assured. Generally, for product sales that are not bundled with an application service these criteria are met at the time product is shipped, except for shipments made on the basis of “FOB Destination” terms, in which case title transfers to the customer and the revenue is recorded by the Company when the shipment reaches the customer. Customers generally do not have a right of return except for defective products returned during the warranty period. The Company records estimated commitments related to customer incentive programs as reductions of revenues.

In addition to product sales, the Company provides Software as a Service (SaaS) subscriptions for its fleet management and vehicle telematics applications through which customers are provided with the ability to wirelessly communicate with monitoring devices installed in vehicles and other mobile or remote assets via software applications hosted by the Company. Generally, the Company defers the recognition of revenue for the products that are sold with application subscriptions because the products are not functional without the application services. In such circumstances, the associated product costs are recorded as deferred costs in the balance sheet. The deferred product revenue and deferred product cost amounts are amortized to application subscriptions revenue and cost of revenue on a straight-line basis over minimum contractual subscription periods of one to five years. Revenues from renewals of data communication services after the initial contract term are recognized as application subscriptions revenue when the services are provided. When customers prepay application subscription renewals, such amounts are recorded as deferred revenues and are recognized ratably over the renewal term.

5



In the United States, the Company generally recognizes revenue on LoJack product sales that have no associated continuing service obligations on the part of the Company upon installation of the products. Revenue relating to sales made to the Company’s third party installation partners, who purchase the Company’s products and perform installations themselves, is recognized upon shipment, which is prior to the installation of the related products in the end user’s vehicle. Revenue from the sales of products to international licensees is recognized upon shipment of the products to the licensee or when payment becomes reasonably assured, whichever is later.

In Italy, the purchase of an initial monitoring service contract is a requirement at the time the consumer purchases a LoJack product. Revenue is recognized over the life of the contract. These contracts, which are sold separately from the LoJack hardware, are offered for terms ranging from 12 to 60 months and are generally payable in full upon activation of the related unit or renewal of a previous contract. Customers are also offered a month-to-month option for service contracts.

The Company offers several types of extended warranty contracts in the United States. For those contracts for which an independent third party insurer, and not the Company, is the primary obligor, the Company recognizes revenue at the time of the sale of the warranty. For those warranty products to which the Company is the primary obligor, revenue is deferred and is recognized over five years, which is the estimated life of new vehicle ownership. For the majority of extended warranty contracts originated after 2011, the Company recognizes revenue at the time of sale.

For those warranties for which an independent third party insurer, and not the Company, is the primary obligor, the Company records revenue on a gross basis, with related costs being included in cost of goods sold. The Company considered the factors for gross and net revenue recording and determined that despite not being the primary obligor for the majority of these arrangements, gross revenue reporting was appropriate based on the relevant accounting guidance. Specifically, the Company has latitude in establishing price; it can change the product offering; it has discretion in supplier selection; it is involved in the determination of product or service specifications; it bears the credit risk; and the amount that it earns on each contract is not fixed.

Cash and Cash Equivalents

The Company considers all highly liquid investments with remaining maturities at date of purchase of three months or less to be cash equivalents.

Fair Value Measurements

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly manner in an arms-length transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has elected the fair value option for its investment in marketable securities on a contract-by-contract basis at the time each contract is initially recognized in the financial statements or upon an event that gives rise to a new basis of accounting for the items.

6



Foreign Currency Translation and Accumulated Other Comprehensive Loss Account

A cumulative foreign currency translation loss of $850,000 related to the Company’s foreign subsidiaries is included in accumulated other comprehensive income (loss) in the stockholders’ equity section of the consolidated balance sheet at August 31, 2016. The aggregate foreign currency transaction exchange rate gains (losses) included in determining income (loss) before income taxes and equity in net loss of affiliate were $405,000 and $(29,000) in the six months ended August 31, 2016 and 2015, respectively.

Recently Issued Accounting Standards

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-09, Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). This update is intended to simplify the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those fiscal years. The Company is currently evaluating the impact of adoption of the new standard on its consolidated financial statements.

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Early adoption is permitted. The Company is currently evaluating the impact of adoption of the new standard on its consolidated financial statements.

In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). This standard revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments. Under the new guidance, entities will have to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. ASU 2016-01 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of this revenue standard for periods beginning after December 15, 2016 to December 15, 2017, with early adoption permitted but not earlier than the original effective date. ASU 2014-09 must be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is continuing to evaluate the effect and methodology of adopting this accounting standard on its results of operations, cash flows and financial position.

In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). This update amends the definition of a discontinued operation, and requires additional disclosures about discontinued operations, as well as disposal transactions that do not meet the discontinued operations criteria. Under this new guidance, only disposals of a component representing a strategic shift in operations that has or will have a major impact on the Company’s operations or financial results should be classified as discontinued operations. The effective date of this standard was March 1, 2015. See Note 15 which describes the effect of the adoption of this standard.

7



NOTE 2 – LOJACK ACQUISITION

In March 2016, the Company completed the acquisition of all outstanding shares of common stock of LoJack. As a result of the acquisition, LoJack became a wholly-owned subsidiary of CalAmp and is consolidated with the Company’s financial statements as of March 15, 2016 as a component of the Company’s Wireless DataCom business segment. The Company funded the acquisition from cash on hand. The total purchase price was $131.7 million, which included the $5.5 million fair value of the 850,100 shares of LoJack common stock that CalAmp purchased in the open market in November and December 2015, prior to entering into a definitive acquisition agreement with LoJack.

Pursuant to the Company's business combinations accounting policy, the Company estimated the preliminary fair values of net tangible and intangible assets acquired, and the excess of the consideration transferred over the aggregate of such fair values was recorded as goodwill. The preliminary fair values of net tangible assets and intangible assets acquired were based upon preliminary valuations. The Company's estimates and assumptions reflected in such preliminary valuations are subject to change within the measurement period, which is up to one year from the acquisition date. The primary areas that remain preliminary relate to the fair values of intangible assets acquired, certain tangible assets and liabilities acquired, certain legal matters, deferred income taxes and goodwill. The Company expects to continue to obtain information to assist in determining the fair values of the net assets acquired during the measurement period. The following is the preliminary purchase price allocation for LoJack (in thousands):

Purchase price             $        131,735
Less cash acquired, net of debt assumed (9,303 )
       Net cash paid 122,432
Fair value of net assets acquired:
       Current assets other than cash $        41,532
       Property and equipment 12,259
       Developed technology 8,200
       Tradename 35,500
       Customer lists 4,650
       Dealer relationships 16,850
       Other non-current assets 4,208
       Deferred tax liability (2,700 )
       Current liabilities (33,457 )
       Deferred revenue, non-current (8,698 )
       Other non-current liabilities (2,584 )
              Total fair value of net assets acquired 75,760
Goodwill $ 46,672

The Company paid a premium (i.e., goodwill) over the fair value of the net tangible and identified intangible assets acquired. The Company believes the acquisition aligns with its strategy to deliver innovative, next generation connected vehicle telematics technologies, thereby accelerating the Company’s strategic roadmap in this large and fast growing market. Furthermore, the Company believes that combining CalAmp's leading portfolio of wireless connectivity devices, software, services and applications with LoJack’s world-renowned brand, proprietary stolen vehicle recovery product, unique law enforcement network and strong relationships with auto dealers, heavy equipment providers and global licensees will create a market leader that is well-positioned to drive the broad adoption of connected vehicle telematics technologies and applications worldwide. The combined enterprise offers customers access to integrated, turnkey offerings that enable a multitude of high value applications encompassing vehicle security and enhanced driver safety. Furthermore, the combination of CalAmp’s and LoJack’s technology offerings is expected to provide global customers with connected vehicle applications to help ensure that retail auto dealers remain competitive and relevant in today’s rapidly evolving markets.

8



The goodwill arising from the LoJack acquisition is not deductible for income tax purposes.

The fair value of the LoJack trade receivables at March 15, 2016 was $21.2 million, comprised of a gross contractual amount of $22.3 million net of receivables of $1.1 million not expected to be collected.

In connection with the acquisition of LoJack, the Company has assumed liabilities related to quality assurance programs, warranty claims and contract obligations which are included in accrued expenses and other current liabilities in the purchase price allocation described above. The fair value of inventories acquired included a purchase accounting fair market value step-up of $4.6 million. In the six months ended August 31, 2016, the Company recognized $4.3 million of this markup as a component of cost of revenues that reflects the extent to which the inventory that was subject to step-up was sold to the Company’s customers in such period. Included in inventory as of August 31, 2016 was $0.3 million relating to the remaining fair value step-up associated with the LoJack acquisition.

During the quarter ended August 31, 2016, the Company received an independent appraisal of LoJack’s property and equipment, which resulted in a purchase accounting fair market value step-up of $2.6 million. In the three months ended August 31, 2016, the Company recognized $0.4 million of this markup as a component of cost of revenues and operating expenses that reflects the extent to which the property, equipment and improvements that were subject to the step-up were depreciated.

Acquisition and integration-related costs of $3.5 million were included in selling, general, and administrative expenses in the Company's statements of comprehensive income (loss) for the three and six months ended August 31, 2016.

Revenues of LoJack included in the consolidated statements of operations for the three and six months ended August 31, 2016 were $31.9 million and $59.8 million, respectively. Post-acquisition earnings of LoJack on a standalone basis are impracticable to determine, because immediately following the acquisition CalAmp began to integrate LoJack into its existing operations.

The following is unaudited pro forma consolidated financial information for the Company presented as if the acquisition of LoJack had occurred on March 1, 2015, the beginning of the Company’s prior fiscal year.

(in thousands except per share amounts)

      Pro Forma
Six Months Ended
August 31,
2016       2015
Revenues $      186,881 $      200,539
Net income $ 5,447 $ 2,120
 
Earnings per share:
       Basic $ 0.15 $ 0.06
       Diluted $ 0.15 $ 0.06
 
Shares used in computing earnings per share:
       Basic 36,425 36,049
       Diluted 36,931 36,691

9



The following adjustments were included in the unaudited pro forma financial information (in thousands):

Pro Forma
Six Months Ended
August 31,
      2016       2015
LoJack standalone net income:
       From March 1 to March 14, 2016 $       973 $       -
       For the six month period ended September 30, 2015 - 2,669
Increase (decrease) in revenue for fair valuation of
       deferred revenue 984 (984 )
(Increase) decrease in costs and expenses:  
       Amortization of inventory step-up 4,318 (4,318 )
       Amortization of intangible assets and depreciation of
              property, equipment and improvements acquired         (309 ) (3,700 )
       Acquisition and integration expenses 3,539 (3,195 )
       Net increase (decrease) in pretax income (loss) 9,505 (9,528 )
Income tax effects (1,920 ) 4,090
Change in net income (loss) 7,585 (5,438 )
Net income (loss) as reported (2,138 ) 7,558
Pro forma net income loss $ 5,447 $ 2,120

The pro forma consolidated financial information is not necessarily indicative of what the Company's actual results of operations would have been had LoJack been included in the Company's historical consolidated financial statements for all of the six month periods ended August 31, 2016 and 2015. In addition, the pro forma consolidated financial information does not attempt to project the future results of operations of the combined company.

NOTE 3 – CASH, CASH EQUIVALENTS AND INVESTMENTS

The following tables summarize the Company’s financial instrument assets as of August 31, 2016 and February 29, 2016 using the hierarchy described in Note 1 under the heading “Fair Value Measurements” (in thousands):

As of August 31, 2016
Balance Sheet Classification
of Fair Value
Unrealized Cash and Short-Term
Adjusted Gains Fair Cash Marketable Other
Cost (Losses) Value Equivalents Securities Assets
Cash       $      31,665       $             -       $      31,665       $           31,665       $           -       $       -
 
Level 1:
       Commercial paper 40 - 40 40 - -
       Mutual funds (1) 5,171 67 5,238 - - 5,238
       Equity investment in
              French licensee (2) 296 (10 ) 286 - - 286
 
Level 2:
       Repurchase agreements 63,000 - 63,000 63,000 - -
       Corporate bonds 22,302 (3 ) 22,299 - 22,299 -
 
Total $ 122,474 $ 54 $ 122,528 $ 94,705 $ 22,299 $ 5,524

10



As of February 29, 2016
Balance Sheet Classification
  of Fair Value
Unrealized Cash and Short-Term
Adjusted Gains Fair Cash Marketable Other
      Cost       (Losses)       Value       Equivalents       Securities       Assets
Cash $      6,890 $        - $      6,890 $      6,890 $      - $      -
 
Level 1:
       Mutual funds (1) 3,753 (383 ) 3,370 - - 3,370
       LoJack common stock (3) 4,050 1,416 5,466 - - 5,466
 
Level 2:
       Repurchase agreements 130,900 - 130,900 130,900 - -
       Corporate bonds 82,300 (16 ) 82,284 1,556 80,728
       Commercial paper 8,032 - 8,032 42 7,990 -
 
Total $ 235,925 $ 1,017 $ 236,942 $ 139,388 $ 88,718 $ 8,836

       (1)        The Company has established a non-qualified deferred compensation plan for certain members of management and all non-employee directors. The Company is informally funding its obligations under the deferred compensation plan by purchasing shares in various equity, bond and money market mutual funds that are held in a “Rabbi Trust” and are restricted for payment of obligations to plan participants. The deferred compensation plan liability is included in Other Non-current Liabilities in the accompanying consolidated balance sheets.
 
(2) The equity investment in LoJack’s French licensee, in the form of a publicly-traded common stock, is accounted for as an available-for-sale security and is valued at the quoted closing price on its market exchange. The related unrealized gains or losses are included in accumulated other comprehensive income (loss) in the stockholders’ equity section of the consolidated balance sheet.
 
(3) The Company purchased 850,100 shares of LoJack common stock in the open market in November and December 2015, prior to entering into a definitive agreement to acquire 100% of LoJack’s common stock. These shares were considered trading securities and were recorded at fair value as of February 29, 2016.

NOTE 4 - INVENTORIES

Inventories consist of the following (in thousands):

August 31,       February 29,
2016   2016
Raw materials $     16,202 $     14,145
Work in process   432 180
Finished goods 11,365 2,406
$ 27,999 $ 16,731

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NOTE 5 – GOODWILL AND OTHER INTANGIBLE ASSETS

All goodwill shown in the accompanying consolidated balance sheets is associated with the Company’s Wireless DataCom segment. Changes in goodwill are as follows (in thousands):

Six Months Ended
  August 31,
2016       2015
Balance at beginning of period $      16,508 $      15,483
Acquisition of LoJack 46,672 -
Acquisition of Crashboxx   - 1,025
Balance at end of period $ 63,180 $ 16,508

Other intangible assets are comprised as follows (in thousands):

Gross Accumulated Amortization Net
  Amort-
ization Feb. 29, Addi- Aug. 31, Feb. 29, Aug. 31, Aug. 31, Feb. 29,
   Period    2016    tions    2016    2016    Expense    2016    2016    2016
Supply contract 5 years $    2,220 $     - $    2,220 $    1,679 $    216 $    1,895 $    325 $    541
Developed technology 2-7 years 14,080 8,200 22,280 6,427 1,913 8,340 13,940 7,653
Tradenames 7-10 years 2,143 35,500 37,643 1,522 1,778 3,300 34,343 621
Customer lists 4-7 years 18,300 4,650 22,950 10,358 2,305 12,663 10,287 7,942
Dealer relationships 7 years - 16,850 16,850 - 1,104 1,104 15,746 -
Covenants not to compete 5 years 170 170 128 18 146 24 42
Patents 5 years 273 52 325 62 12 74 251 211
$ 37,186 $ 65,252 $ 102,438 $ 20,176 $ 7,346 $ 27,522 $ 74,916 $ 17,010

Estimated future amortization expense is as follows (in thousands):

Fiscal Year  
2017 (remainder) $     7,730
2018   15,005
2019 11,660
2020 9,652
2021 7,830
Thereafter 23,039
$ 74,916

NOTE 6 – OTHER ASSETS

Other assets consist of the following (in thousands):

August 31, February 29,
2016       2016
Deferred compensation plan assets $     5,238 $     3,370
Investment in international licensees 2,327 -
Equity investment in and loans to UK affiliate 1,124 1,167
Other 2,088 637
Investment in LoJack common stock - 5,466
$ 10,777 $ 10,640

Included in the assets of the LoJack acquisition are investments in international licensees at the preliminary valuation of $2,327,000 consisting of a 12.5% equity interest in LoJack’s Mexican licensee of $1,541,000, a 17.5% equity interest in LoJack’s Benelux licensee of $500,000, and a 5.5% interest in LoJack’s French licensee of $286,000. The Company has not yet obtained all information required to complete the valuation of the Mexican and Benelux investments. The investment in LoJack’s French licensee, in the form of a marketable equity security, is accounted for as an available-for-sale security and is valued at the quoted closing price of its market exchange as of the reporting date.

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The equity investment and loans to the Company’s UK affiliate of $1,124,000 include a 49% equity interest in and loans to Smart Driver Club Limited. The investment is accounted for under the equity method since the Company has significant influence over the investee. The Company’s equity in the net loss of this affiliate amounted to $684,000 for the six months ended August 31, 2016. In May 2016, the Company made a loan of $737,000 denominated in British pounds to Smart Driver Club Limited bearing interest at an annual interest rate of 8%, with principal and all unpaid interest due May 19, 2020.

LoJack became a wholly-owned subsidiary of the Company in March 2016, at which time the investment of $5.5 million as of February 29, 2016 became part of the purchase price of the LoJack acquisition, as described in Note 2.

NOTE 7 - FINANCING ARRANGEMENTS

Bank Credit Facility

The Company has a credit facility with Square 1 Bank that provides for borrowings up to $15 million or 85% of eligible accounts receivable, whichever is less. The credit facility expires on March 1, 2017. Borrowings under this line of credit bear interest at the bank’s prime rate. There were no borrowings outstanding under this credit facility at August 31, 2016 or February 29, 2016.

The bank credit facility contains financial covenants that require the Company to maintain a minimum level of earnings before interest, income taxes, depreciation, amortization and other noncash charges (EBITDA) and a minimum debt coverage ratio, both measured monthly on a rolling 12-month basis. At August 31, 2016, the Company was in compliance with its debt covenants under the credit facility.

1.625% Convertible Senior Unsecured Notes

As of August 31, 2016, the Company had $172.5 million aggregate principal amount of convertible senior unsecured notes (the “Notes”) outstanding. The Notes are senior unsecured obligations of the Company and bear interest at a rate of 1.625% per year payable in cash on May 15 and November 15 of each year beginning on November 15, 2015. The Notes will mature on May 15, 2020 unless earlier converted or repurchased in accordance with their terms. The Company may not redeem the Notes prior to their stated maturity date. The Notes will be convertible into cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election, based on an initial conversion rate of 36.2398 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of $27.594 per share of common stock, subject to customary adjustments. Holders may convert their Notes at their option at any time prior to November 15, 2019 upon the occurrence of certain events in the future, as defined in the indenture agreement dated May 6, 2015 (the “Indenture”). During the period from November 15, 2019 to May 13, 2020, holders may convert all or any portion of their Notes regardless of the foregoing conditions. The Company’s intent is to settle the principal amount of the Notes in cash upon conversion. If the conversion value exceeds the Note principal amount, the Company would deliver shares of its common stock in respect to the remainder of its conversion obligation in excess of the aggregate principal amount (the “conversion spread”). The shares associated with the conversion spread, if any, would be included in the denominator for the computation of diluted earnings per share, with such shares calculated using the average closing price of the Company’s common stock during each period. As of August 31, 2016, none of the conditions allowing holders of the Notes to convert have been met.

If the Company undergoes a fundamental change (as defined in the Indenture), holders of the Notes may require the Company to repurchase their Notes at a repurchase price of 100% of the principal amount of the Notes, plus any accrued and unpaid interest, if any, to but not including the fundamental change repurchase date.

In addition, following certain corporate events that occur prior to maturity, the Company will increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event in certain circumstances. In such event, an aggregate of up to 2.5 million additional shares of common stock could be issued upon conversions in connection with such corporate events, subject to adjustment in the same manner as the conversion rate.

13



Balances attributable to the Notes consist of the following (in thousands):

August 31, February 29,
2016       2016
Principal $      172,500 $        172,500
Less: Unamortized debt discount   (25,933 ) (29,002 )
          Unamortized debt issuance costs (3,307 ) (3,698 )
Net carrying amount of the Notes $ 143,260 $ 139,800

The Notes are carried at their principal amount, net of unamortized debt discount and issuance costs, and are not carried at fair value at each period end. The issuance date fair value of the liability component of the Notes in the amount of $138.9 million was determined using a discounted cash flow analysis, in which the projected interest and principal payments were discounted back to the issuance date of the Notes at a market interest rate for nonconvertible debt of 6.2%, which represents a Level 3 fair value measurement. The debt discount of $33.6 million is being amortized to interest expense using the effective interest method with an effective interest rate of 6.2% over the period from the issuance date through the contractual maturity date of the Notes of May 15, 2020. The approximate fair value of the Notes as of August 31, 2016 was $161 million, which was estimated on the basis of inputs that are observable in the market and which is considered a Level 2 measurement method in the fair value hierarchy.

See Note 14 for information related to interest expense on the Notes.

NOTE 8 - INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and for income tax purposes. The Company evaluates the realizability of its deferred income tax assets and a valuation allowance is provided, as necessary. In assessing this valuation allowance, the Company reviews historical and future expected operating results and other factors, including its recent cumulative earnings experience, expectations of future taxable income by taxing jurisdiction and the carryforward periods available for tax reporting purposes, to determine whether it is more likely than not that deferred tax assets are realizable.

The Company files income tax returns in the U.S. federal jurisdiction, various U.S. states and Puerto Rico, Canada, United Kingdom, Ireland, Italy, Netherlands, Brazil, Mexico, Uruguay and New Zealand. Income tax returns filed for fiscal year 2011 and earlier are not subject to examination by U.S. federal and state tax authorities. Certain income tax returns for fiscal years 2012 through 2016 remain open to examination by U.S. federal and state tax authorities. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods in which net operating losses or tax credits were generated and carried forward, and to make adjustments up to the net operating loss or tax credit carryforward amount. Income tax returns for fiscal years 2012 through 2016 remain open to examination by tax authorities in Canada, United Kingdom, Ireland, Italy, Netherlands, Brazil, Mexico, Uruguay, New Zealand, and Puerto Rico.

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NOTE 9 - EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period, plus the dilutive effect of outstanding stock options and restricted stock-based awards using the treasury stock method. The following table sets forth the composition of weighted average shares used in the computation of basic and diluted earnings per share (in thousands):

Three Months Ended Six Months Ended
August 31, August 31,
      2016       2015       2016       2015
Basic weighted average number of common
       shares outstanding 36,390 36,135 36,425 36,049
Effect of stock options and restricted stock units
       computed on treasury stock method 459 581 - 642
Diluted weighted average number of common
       shares outstanding      36,849      36,716      36,425      36,691

All outstanding options and restricted stock units at August 31, 2016 were excluded from the computation of diluted earnings per share for the six month period then ended because the Company reported a net loss and the effect of inclusion would be antidilutive. Shares subject to anti-dilutive stock options and restricted stock-based awards of 450,000 at August 31, 2016 were excluded from the calculations of diluted earnings per share for the three months then ended. Shares subject to anti-dilutive stock options and restricted stock-based awards of 238,000 at August 31, 2015 were excluded from the calculations of diluted earnings per share for the three and six month periods then ended.

The Company has the option to pay cash, issue shares of common stock or any combination thereof for the aggregate amount due upon conversion of the Notes. The Company’s intent is to settle the principal amount of the Notes in cash upon conversion. As a result, only the shares issuable for the conversion value, if any, in excess of the principal amounts of the Notes would be included in diluted earnings per share. From the time of the issuance of Notes, the average market price of the Company’s common stock has been less than the $27.594 initial conversion price of the Notes, and consequently no shares have been included in diluted earnings per share for the conversion value of the Notes.

NOTE 10 – COMPREHENSIVE INCOME

Comprehensive income consists of two components, net income (loss) and other comprehensive income (loss) (“OCI”). OCI refers to revenue, expenses and gains and losses that under U.S. Generally Accepted Accounting Principles (GAAP) are recorded as an element of stockholders’ equity but are excluded from net income (loss). The Company’s OCI consists of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency and unrealized gains and losses on marketable securities classified as available-for-sale.

The following table shows the changes in Accumulated Other Comprehensive Loss by component for the six months ended August 31, 2016 (in thousands):

Cumulative Unrealized
Foreign Gains/Losses
on Marketable
  Currency
      Translation       Securities       Total
Balances at February 29, 2016 $            (226 ) $                     - $             (226 )
Other comprehensive loss, net of tax (624 ) (8 ) (632 )
Balances at August 31, 2016 $ (850 ) $ (8 ) $ (858 )

NOTE 11 – STOCKHOLDERS’ EQUITY

Stock Repurchase

In June 2016, the Company’s Board of Directors authorized a share repurchase program, under which the Company may repurchase up to $25 million of its outstanding common stock. Under the stock repurchase program, the Company may repurchase shares in open market purchases in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The extent to which CalAmp repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by CalAmp’s management team. The repurchase program may be suspended or discontinued at any time. The Company expects to finance the purchases with existing cash balances.

15



During the three and six months ended August 31, 2016, the Company repurchased 0.6 million shares of its common stock at an average share cost of $14.57, including commissions. The total cost of the share repurchases during the three and six months ended August 31, 2016 was $8.5 million. All of the share repurchases were paid for as of August 31, 2016. All common stock repurchased was retired as of August 31, 2016. Of the $25 million authorized for share repurchases, $16.5 million is remaining as of August 31, 2016.

Equity Awards

Stock-based compensation expense is included in the following captions of the unaudited consolidated statements of comprehensive income (loss) (in thousands):

Three Months Ended Six Months Ended
August 31,       August 31,
2016       2015 2016       2015
Cost of revenues $      68 $      54 $      132 $      119
Research and development   356 198     537 362
Selling 403 295 698 495
General and administrative 794 842 2,238 1,633
$ 1,621 $ 1,389 $ 3,605 $ 2,609

Changes in the Company’s outstanding stock options during the six months ended August 31, 2016 were as follows (options in thousands):

Weighted
Number of Average
  Options       Exercise Price
Outstanding at February 29, 2016 860 $              6.96
             
Granted 227 14.49
Exercised (73 ) 10.66
Forfeited or expired (4 ) (15.43 )
Outstanding at August 31, 2016                1,010 $ 8.35
             
Exercisable at August 31, 2016 679 $ 4.95

Changes in the Company’s outstanding restricted stock shares, performance stock units (“PSUs”) and restricted stock units (“RSUs”) during the six months ended August 31, 2016 were as follows (shares, PSUs and RSUs in thousands):

Number of
Restricted Weighted
Shares,       Average Grant
  PSUs and Date Fair
RSUs Value
Outstanding at February 29, 2016 953 $             16.66
           
Granted 726 14.57
Vested (317 ) 14.65
Forfeited (68 ) 15.73
Outstanding at August 31, 2016                 1,294 $ 16.03

16



During the six months ended August 31, 2016, the Company retained 97,267 shares of vested restricted stock and RSUs to satisfy the minimum required statutory amount of employee withholding taxes.

As of August 31, 2016, there was $21.0 million of total unrecognized stock-based compensation cost related to outstanding nonvested equity awards that is expected to be recognized as expense over a weighted-average remaining vesting period of 3.1 years.

NOTE 12 - CONCENTRATION OF RISK

One Wireless DataCom customer in the heavy equipment industry accounted for 9% and 15% of consolidated accounts receivable at August 31, 2016 and February 29, 2016, respectively. The sole customer of the Company’s Satellite segment accounted for 6% and 10% of consolidated accounts receivable at August 31, 2016 and February 29, 2016.

The Company has contract manufacturing arrangements with sole source suppliers for LoJack tracking units and transmission towers. As of August 31, 2016, these suppliers accounted for less than 10% of the Company’s total accounts payable. Some of the Company’s other components, assemblies and electronic manufacturing services are also purchased from sole source suppliers. In addition, a substantial portion of the Company’s inventory is purchased from one supplier that functions as an independent foreign procurement agent and contract manufacturer. This supplier accounted for 41% and 56% of the Company’s total inventory purchases in the six months ended August 31, 2016 and 2015, respectively. As of August 31, 2016, this supplier accounted for 42% of the Company’s total accounts payable. Another supplier accounted for 11% and 16% of the Company’s total inventory purchases in the six months ended August 31, 2016 and 2015, respectively, and 17% of the Company’s total accounts payable as of August 31, 2016.

NOTE 13 - PRODUCT WARRANTIES

The Company generally warrants its products against defects over periods ranging from 12 to 24 months. An accrual for estimated future costs relating to products returned under warranty is recorded as an expense when products are shipped. At the end of each fiscal quarter, the Company adjusts its liability for warranty claims based on its actual warranty claims experience as a percentage of revenues for the preceding one to two years and also considers the impact of the known operational issues that may have a greater impact than historical trends. The warranty reserve is included in Other Current Liabilities in the unaudited consolidated balance sheets. Activity in the accrued warranty costs liability for the six months ended August 31, 2016 and 2015 is as follows (in thousands):

Six Months Ended
  August 31,
2016       2015
Balance at beginning of period $      1,892 $      1,819
Assumed from acquisition of LoJack 1,883 $ -
Charged to costs and expenses 530 511
Deductions (1,075 ) (531 )
Balance at end of period $ 3,230 $ 1,799

In September 2014, LoJack commenced a quality assurance program in the U.S. related to a battery performance issue in self-powered LoJack units under base or extended warranty. LoJack also entered into agreements to support quality assurance programs with all major international licensees that identified performance issues in certain self-powered units equipped with the battery pack. At August 31, 2016, the Company had a reserve of $1.1 million, which is included in the accrued warranty costs liability, for certain costs associated with this program, quality assurance programs in other countries and markets, and other business concessions related to the battery performance matter as further described in Note 16. CalAmp anticipates that the U.S. quality assurance program will be completed by the end of fiscal 2018.

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NOTE 14 – OTHER FINANCIAL INFORMATION

Supplemental Balance Sheet Information

Other non-current liabilities consist of the following (in thousands):

August 31,       February 29,
2016 2016
Deferred compensation plan liability $      5,265 $      3,392
Deferred revenue 6,087 1,070
Deferred rent 458 559
Acquisition-related contingent consideration 583 530
Other 1,107 -
$ 13,500 $ 5,551

The acquisition-related contingent consideration is comprised of the estimated earn-out payable to the sellers in conjunction with the Company’s April 2015 acquisition of Crashboxx.

Supplemental Statements of Comprehensive Income (Loss) Information

Investment income consists of the following (in thousands):

Three Months Ended Six Months Ended
August 31, August 31,
  2016       2015       2016       2015
Investment income on cash equivalents and marketable securities $        153 $        154   $        329 $        150
Investment income (loss) on deferred compensation plan Rabbi Trust assets        188     (197 ) 465 (165 )
Dividend income 114 - 114 -
Total investment income (loss) $ 455 $ (43 ) $ 908 $ (15 )

Interest expense consists of the following (in thousands):

Three Months Ended Six Months Ended
August 31, August 31,
        2016       2015       2016       2015
Interest expense on convertible senior unsecured notes:  
       Stated interest at 1.625% per annum $      701 $      701 $      1,402 $       882
       Amortization of note discount 1,562 1,353 3,069 1,736
       Amortization of debt issue costs 199 173 391 221
  2,462 2,227 4,862 2,839
Other interest expense 12 53 36 89
Total interest expense $ 2,474 $ 2,280 $ 4,898 $ 2,928

Supplemental Cash Flow Information

“Net cash provided by operating activities” includes cash payments for interest and income taxes as follows (in thousands):

Six Months Ended
  August 31,
2016       2015
Interest expense paid $       1,447 $       38
Income tax paid $ 979 $ 337

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Following is the supplemental schedule of non-cash investing and financing activities (in thousands):

  Six Months Ended
August 31,
2016       2015
Acquisition of Crashboxx in April 2015:
       Accrued liability for earn-out consideration $      - $      455

NOTE 15 - SEGMENT INFORMATION

Segment information for the three and six months ended August 31, 2016 and 2015 is as follows (dollars in thousands):

  Three Months Ended August 31, 2016 Three Months Ended August 31, 2015
Operating Segments Operating Segments
   Wireless       Corporate    Wireless    Corporate
DataCom Satellite Expenses    Total DataCom   Satellite    Expenses    Total
Revenues $     83,807 $ 6,672   $ 90,479 $ 61,819 $ 7,989   $   69,808
Gross profit $ 36,209 $ 1,405   $ 37,614 $ 23,098 $ 2,205 $ 25,303
Gross margin 43.2 % 21.1 % 41.6 % 37.4 % 27.6 %   36.2 %
Operating income $   5,035 $   139 $      (1,268 ) $   3,906 $   7,529 $   1,557 $      (1,188 ) $ 7,898
                                                                 
  Six Months Ended August 31, 2016 Six Months Ended August 31, 2015
Operating Segments Operating Segments
   Wireless       Corporate    Wireless    Corporate
DataCom Satellite Expenses    Total DataCom   Satellite    Expenses    Total
Revenues $ 166,557 $ 15,069     $ 181,626 $ 119,645 $ 15,592 $   135,237
Gross profit $ 68,719 $ 3,729 $ 72,448 $ 44,686 $ 4,143 $ 48,829
Gross margin 41.3 % 24.7 % 39.9 % 37.3 % 26.6 % 36.1 %
Operating income $   6,072 $   1,547 $      (5,751 ) $   1,868 $   14,419 $   2,777 $      (2,254 ) $ 14,942

The Company considers operating income to be a primary measure of operating performance of its business segments. The amount shown for each period in the “Corporate Expenses” column above consists of expenses that are not allocated to the business segments. These non-allocated corporate expenses include salaries and benefits of certain corporate staff and expenses such as audit fees, investor relations, stock listing fees, director and officer liability insurance, and director fees and expenses.

Products of the Company's Satellite segment were sold to EchoStar. In August 2016, EchoStar ceased purchasing products from CalAmp and the Satellite business was shut down effective August 31, 2016. Historically, shared service expenses for accounting, human resources, information technology and legal administration have been allocated to the two reporting segments. Any such shared expenses that will not be eliminated in future periods as a result of the shutdown of the Satellite business have been reclassified in the segment information for all periods presented from the Satellite segment to the Wireless DataCom segment, with no effect on total operating income.

In fiscal 2016 and the first half of fiscal 2017, Satellite segment revenues accounted for only 14% and 8%, respectively, of the Company’s consolidated revenues. After giving retroactive effect to the reclassification of general and administration expense from the Satellite segment to the Wireless DataCom segment for shared service expenses that will not be eliminated as a result of the Satellite business shutdown, Satellite segment operating income in fiscal 2016 and the first half of fiscal 2017 represented 23% and 20%, respectively, of total business unit operating income, excluding corporate expenses not allocated to the business units of $6,480,000 and $5,751,000 in fiscal 2016 and the first half of fiscal 2017. Also, as a result of transitioning the Satellite business to a variable cost operating model in fiscal 2012, in which all DBS product manufacturing was moved to a contract manufacturer, assets and liabilities of the Satellite segment represented only about 2% of consolidated assets and liabilities at the end of fiscal 2016. Accordingly, CalAmp believes that the shutdown of the Satellite segment does not qualify for discontinued operations accounting treatment because it represents neither a strategic shift nor did it have or will it have a major impact on the Company’s business or consolidated financial statements.

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NOTE 16 - COMMITMENTS AND CONTINGENCIES

Lease Commitments

A summary of future payments of operating lease commitments is as follows (dollars in thousands):

2017 (remainder) $      3,621
2018   6,109
2019 4,656
2020 3,013
2021 1,559
Thereafter 3,712
Total $ 22,670

Legal Proceedings

Omega patent infringement claim

In December 2013, a patent infringement lawsuit was filed against the Company by Omega Patents, LLC, (“Omega”), a non-practicing entity. Omega alleged that certain of the Company’s vehicle tracking products infringed on certain patents asserted by Omega. On February 24, 2016, a jury in the U.S. District Court for the Middle District of Florida awarded Omega damages of $2.9 million, for which CalAmp recorded a full reserve in the fiscal 2016 fourth quarter. Following trial, Omega brought a motion seeking entry of judgment, an injunction and requesting the court to exercise its discretion to treble damages and assess attorneys’ fees. The Company filed an opposition to Omega’s motion, and the judge’s ruling has not yet been rendered. Motions for judgment as a matter of law and a new trial have not yet been filed because no judgment has been entered. If, following resolution of all post-trial motions, judgment is ultimately entered in Omega’s favor, CalAmp intends to pursue an appeal at the Court of Appeals for the Federal Circuit. In addition to its appeal, CalAmp is seeking to invalidate a number of Omega’s patents in actions filed with the U.S. Patent and Trademark Office. Notwithstanding the adverse jury verdict, the Company continues to believe that its products do not infringe Omega’s patents and that Omega’s patents are not valid, and accordingly CalAmp intends to continue pursuing its judicial and administrative options. While it is not feasible to predict with a high degree of certainty the outcome of this litigation, its ultimate resolution could be material to CalAmp’s cash flows and results of operations. Furthermore, if an injunction is issued by the court, the Company could be prevented from manufacturing and selling a number of its products, which could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Orbcomm patent infringement claim

On April 7, 2016, a patent infringement lawsuit was filed against the Company by Orbcomm Inc. (“Orbcomm”) in the U.S. District Court for the Eastern District of Virginia. Orbcomm alleged that certain of the Company’s systems for tracking, monitoring, and controlling vehicles, machinery, and other assets infringed on certain patents asserted by Orbcomm. Orbcomm has not yet made a specific damages claim, but seeks compensatory damages, treble damages, and an injunction. The Company believes that its products and services do not infringe Orbcomm’s patents and/or that Orbcomm’s patents are invalid. On May 27, 2016, the Company filed a motion to dismiss Orbcomm’s claims on the basis, inter alia, that Orbcomm’s patents are directed at ineligible subject matter and are therefore invalid under 35 U.S.C. § 101. On July 22, 2016, the court denied CalAmp’s motion; however, in light of new Federal Circuit case law, CalAmp filed a motion for reconsideration of its motion to dismiss, and the court has received briefs and scheduled an oral argument, regarding certain aspects of CalAmp’s motion, for October 13, 2016. Regardless of the outcome of its motion to dismiss, the Company intends to vigorously defend itself against Orbcomm’s claims. In addition, on July 19, 2016, CalAmp filed with the court its first amended answer to Orbcomm’s complaint, which included an affirmative defense and a counterclaim alleging that Orbcomm’s patents were unenforceable due to inequitable conduct. Orbcomm then filed a motion to dismiss CalAmp’s inequitable conduct counterclaim and to strike CalAmp’s inequitable conduct defense. On September 9, 2016, the court denied Orbcomm’s motion to dismiss and strike. At this early stage of the lawsuit, it is not feasible to predict with any certainty the outcome of this litigation, and the Company has made no accrual for this claim.

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G.L.M. contract claim

On October 13, 2010, a suit was filed by G.L.M. Security & Sound, Inc. (“G.L.M.”) against LoJack in the United States District Court for the Eastern District of New York (the “Court”) alleging breach of contract, misrepresentation, and violation of the New York franchise law, Mass. Gen. Laws c. 93A and the Robinson-Patman Act, among other claims. G.L.M. sought damages of $10,000,000, punitive damages, interest and attorney’s fees, and treble damages. On September 19, 2014, the Court entered summary judgment in favor of LoJack on G.L.M’s three remaining claims for breach of contract, breach of the duty of good faith and fair dealing, and violation of Mass. Gen. Laws c. 93A. The Court denied G.L.M.’s attempt to amend its complaint on the basis of futility and undue delay. The Court also entered summary judgment in favor of LoJack on its counterclaim for breach of contract. On August 21, 2015, the Court issued a Memorandum and Opinion with respect to LoJack’s claim for damages on its breach of contract counterclaim. The Court found that LoJack is entitled to recover damages and interest on its counterclaim in the total amount of $1.9 million. The Court ordered that judgment enter in that amount and that the case be closed. On August 25, 2015, the clerk of the Court entered judgment in LoJack’s favor. On September 23, 2015, G.L.M. filed a notice of appeal in the Court of Appeals for the Second Circuit. On August 2, 2016, the Second Circuit issued a Mandate on the Summary Order affirming the Court’s August 15, 2015 judgment. The Company is now embarking on collecting its judgment, but there can be no assurances that the Company will be able to recover the full amount of the judgment, if any.

EVE battery claim

LoJack was notified in 2013 by some of its international licensees that some of the batteries manufactured by LoJack’s former battery supplier, EVE Energy Co., Ltd. (“EVE”), and included in self-powered LoJack units these licensees had purchased from LoJack, exhibited degraded performance below LoJack’s quality standards. These notifications led LoJack to perform its own investigation. As a result of this investigation, LoJack confirmed that batteries manufactured by EVE that were included in certain self-powered LoJack units sold in the United States and to LoJack’s international licensees were exhibiting a failure to power over a period of time that could impact the ability of the LoJack unit to transmit a signal when called upon for stolen vehicle recovery. LoJack manufactures both vehicle and self-powered (battery) units and this degraded performance potentially affects only the transmit battery pack in the self-powered units. As of the date of this report, the majority of LoJack units in circulation are vehicle powered.

LoJack has incurred, and expects to continue to incur, costs and expenses related to the actions that it decided to take to address this matter. These costs and expenses may include, among others, those related to quality assurance programs, product or battery replacements, warranty claims, extension of product warranties, legal and other professional fees, litigation, and payments or other business concessions to LoJack’s customers. Because of the ongoing nature of this matter, the Company cannot predict what other actions will be required, nor can it predict the outcome nor estimate the possible loss or range of loss with respect to any such actions. See Note 13 for the accrued warranty cost liability related to this matter.

LoJack filed a formal claim under its relevant insurance policy and was paid $5,000,000.

On October 27, 2014, LoJack and its wholly-owned subsidiary LoJack Ireland commenced arbitration proceedings against EVE by filing a notice of arbitration with a tribunal of with the Hong Kong International Arbitration Centre (the “Tribunal”). The filing alleges that EVE breached representations and warranties made in a supply agreement relating to the quality and performance of batteries supplied by EVE. The arbitration proceedings against EVE were held in Hong Kong on June 6 to 24, 2016. The Tribunal held an additional hearing on September 15 to 16, 2016, and the Tribunal has scheduled an additional hearing for January 9 to 10, 2017, focused on damages. The Company cannot predict the ultimate outcome of the arbitration proceedings or the amount of damages, if any, that the Company may be awarded by the Tribunal.

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In addition to the foregoing matters, from time to time as a normal consequence of doing business, various claims and litigation may be asserted or commenced against the Company. In particular, the Company in the ordinary course of business may receive claims concerning contract performance, or claims that its products or services infringe the intellectual property of third parties. While the outcome of any such claims or litigation cannot be predicted with certainty, management does not believe that the outcome of any of such matters existing at the present time would have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

LoJack Financing Recourse Agreement

LoJack’s financing recourse agreement to certain automobile dealers represents the maximum potential amount of future payments under an agreement with a certain financing company. Pursuant to the recourse agreement, the Company will reimburse participating dealers the unamortized dealer cost of LoJack units purchased by customers via auto loans underwritten by the financing company upon a borrower’s default within the initial 18 months of the auto loan. This agreement was renewed for the year ending December 31, 2016. Based on the unamortized cost of units sold and assuming the default of all borrowers, the Company’s maximum potential amount of future payments under this agreement is $4.2 million as of August 31, 2016. The expected obligation is accrued based on sales to the participating dealers and historical loss experience. As of August 31, 2016, the Company had accrued $73,000 under these guarantees. Accruals for the financing recourse agreement are recorded as a reduction of revenue in the consolidated statement of operations.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues, costs and expenses during the reporting periods. Actual results could differ materially from these estimates. The critical accounting policies listed below involve the Company’s more significant accounting judgments and estimates that are used in the preparation of the consolidated financial statements. These policies are described in greater detail in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) under Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended February 29, 2016, as filed with the Securities and Exchange Commission on April 20, 2016, and include the following areas:

Allowance for doubtful accounts;
Inventory write-downs;
Product warranties;

Deferred income tax assets and uncertain tax positions;

Impairment assessments of goodwill, purchased intangible assets and other long-lived assets;
Stock-based compensation expense; and
Revenue recognition.

RESULTS OF OPERATIONS

OUR COMPANY

The Company is a leading provider of wireless communications products, services and solutions for a broad array of applications to customers globally. The Company’s business activities are organized into our Wireless DataCom and Satellite business segments.

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WIRELESS DATACOM

The Company’s Wireless DataCom segment offers an extensive portfolio of intelligent communications devices, robust and scalable cloud service platform, and targeted software applications to streamline otherwise complex Machine-to-Machine (M2M) deployments. In March 2016, the Company completed the acquisition of LoJack. LoJack focuses on providing a differentiated range of connected vehicle solutions including the industry’s benchmark system for effective stolen vehicle recovery. CalAmp products, services and solutions enable customers to optimize their operations by collecting, monitoring and efficiently reporting business critical data and desired intelligence from high-value mobile and remote assets.

SATELLITE

Up to and including the quarter ended August 31, 2016, products of the Company's Satellite segment were sold to EchoStar, an affiliate of Dish Network, for incorporation into complete subscription Direct Broadcast Satellite (“DBS”) television systems. From fiscal 2000 through fiscal 2007, the Satellite segment represented CalAmp’s core business, reaching a concentration peak in fiscal 2004 when it accounted for 94% of the Company’s consolidated revenue. To diversify away from the Company’s dependence on the lower margin U.S. DBS products industry, during a 36 month period beginning in April 2004 CalAmp consummated six business and product line acquisitions to grow its Wireless DataCom business. As a result of these and subsequent acquisitions and organic growth in this segment, combined with a substantial decline in sales to EchoStar as a result of a DBS product performance issue in fiscal 2008, Wireless DataCom revenues surpassed Satellite revenues for the first time in fiscal 2008, and from that year through fiscal 2016 Wireless DataCom annual revenues have ranged between two and six times the amount of Satellite segment revenues, with the exception of the recession-impacted fiscal 2010.

In April 2016, EchoStar notified the Company that it would stop purchasing products from the Company at the end of its then-current product demand forecast as a result of a consolidation of its supplier base. EchoStar’s product demand forecast with CalAmp extended through August 2016, and the products covered by this forecast were substantially all shipped prior to August 31, 2016. In light of the fact that EchoStar accounted for essentially all of the revenues of the Satellite segment, and it was not considered feasible to resume doing business with DirecTV, the only other DBS service provider in the U.S. that CalAmp last sold product to in fiscal 2009, the Company’s Satellite business was shut down effective August 31, 2016.

In fiscal 2016 and the first half of fiscal 2017, Satellite segment revenues accounted for only 14% and 8%, respectively, of the Company’s consolidated revenues. After giving retroactive effect to the reclassification of general and administration expense from the Satellite segment to the Wireless DataCom segment for shared service expenses that will not be eliminated as a result of the Satellite business shutdown, Satellite segment operating income in fiscal 2016 and the first half of fiscal 2017 represented 23% and 20%, respectively, of total business unit operating income, excluding corporate expenses not allocated to the business units of $6,480,000 and $5,751,000 in fiscal 2016 and the first half of fiscal 2017. Also, as a result of transitioning the Satellite business to a variable cost operating model in fiscal 2012, in which all DBS product manufacturing was moved to a contract manufacturer, assets and liabilities of the Satellite segment represented only about 2% of consolidated assets and liabilities at the end of fiscal 2016. Accordingly, CalAmp believes that the shutdown of the Satellite segment does not qualify for discontinued operations accounting treatment because it represents neither a strategic shift nor did it have or will it have a major impact on the Company’s business or consolidated financial statements.

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Operating Results by Reporting Segment

The Company's revenue, gross profit and operating income by reporting segment are as follows:

REVENUE BY SEGMENT

Three Months Ended August 31, Six Months Ended August 31,
2016 2015 2016 2015
       % of % of % of % of
$000s      Total      $000s      Total      $000s      Total       $000s      Total
Segment
Wireless DataCom $ 83,807 92.6 % $ 61,819 88.6 % $ 166,557 91.7 % $ 119,645 88.5 %
Satellite 6,672 7.4 % 7,989 11.4 % 15,069 8.3 % 15,592 11.5 %
Total $      90,479       100.0 % $      69,808       100.0 % $      181,626       100.0 % $      135,237       100.0 %

GROSS PROFIT BY SEGMENT

Three Months Ended August 31, Six Months Ended August 31,
2016 2015 2016 2015
       % of % of % of % of
$000s      Total      $000s      Total      $000s      Total       $000s      Total
Segment
Wireless DataCom $ 36,209 96.3 % $ 23,098 91.3 % $ 68,719 94.9 % $ 44,686 91.5 %
Satellite 1,405 3.7 % 2,205 8.7 % 3,729 5.1 % 4,143 8.5 %
Total $      37,614       100.0 % $      25,303       100.0 % $      72,448       100.0 % $      48,829       100.0 %

OPERATING INCOME BY SEGMENT

Three Months Ended August 31, Six Months Ended August 31,
2016 2015   2016   2015
% of % of % of % of
  Total Total     Total Total
     $000s      Revenue      $000s      Revenue      $000s      Revenue       $000s      Revenue
Segment        
Wireless DataCom $ 5,035 5.6 % $ 7,529 10.8 % $ 6,072 3.3 % $ 14,419 10.7 %
Satellite 139 0.2 % 1,557   2.2 % 1,547 0.9 % 2,777 2.1 %
Corporate expenses   (1,268 ) (1.4 %)   (1,188 ) (1.7 %) (5,751 ) (3.2 %) (2,254 ) (1.7 %)
Total $     3,906          4.4 % $     7,898        11.3 % $     1,868           1.0 % $     14,942        11.1 %

Revenue

Wireless DataCom revenue increased by $22.0 million, or 36%, to $83.8 million in the second quarter of fiscal 2017 compared to the fiscal 2016 second quarter. This increase was due to the revenue contribution of the newly acquired LoJack business, which accounted for revenue of $31.9 million in the second quarter, offset by a decrease in Mobile Resource Management (“MRM”) product revenues. For the six months ended August 31, 2016, Wireless DataCom revenue increased by $46.9 million, or 39%, to $166.6 million compared to the same period in the prior year. This increase was due to the LoJack business, which contributed $59.8 million to revenue, and a $5.9 million increase in revenue from our heavy equipment customer, offset by decreases in revenue of our other lines of business, primarily MRM product revenues.

Satellite revenue decreased by $1.3 million, or 16%, to $6.7 million in the three months ended August 31, 2016 compared to the same period last year and for the six months ended August 31, 2016, Satellite revenue decreased by $0.5 million, or 3%, to 15.1 million from $15.6 million for the same period of the prior year. These decreases were due to the fluctuation and eventual ceasing in product demand on the part of EchoStar, the Satellite segment’s sole customer which, as explained above, led the Company to shut down its Satellite business.

Gross Profit and Gross Margins

Wireless DataCom gross profit increased by $13.1 million to $36.2 million in the fiscal 2017 second quarter compared to $23.1 million in the second quarter of last year primarily as a result of higher revenue. Gross margin increased to 43.2% in the second quarter of fiscal 2017 from 37.4% in the second quarter of fiscal 2016. These improvements were primarily due to higher margins for the LoJack business acquired in March 2016.

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Wireless DataCom gross profit increased 54% to $68.7 million in the six months ended August 31, 2016, compared to $44.7 million for the same period of the prior year primarily due to increased revenue. Gross margin increased to 41.3% in the six months ended August 31, 2016 from 37.3% for the same period of the prior year primarily due to higher margins for the LoJack business.

Satellite gross profit decreased by $0.8 million in the fiscal 2017 second quarter compared to the second quarter of last year due to lower revenue and the closing of the Satellite business. Satellite’s gross margin decreased to 21.1% in the second quarter of fiscal 2017 from 27.6% in the second quarter of fiscal 2016.

The Satellite segment had gross profit of $3.7 million for the six months ended August 31, 2016, compared to gross profit of $4.1 million for the same period of last year. Satellite’s gross margin decreased to 24.7% in the first half of fiscal 2017 compared to 26.6% in the first half of fiscal 2016. These decreases were due to lower revenue and changes in product mix.

Operating Expenses

Consolidated research and development (“R&D”) expense increased by $0.9 million to $5.9 million in the second quarter of fiscal 2017 from $5.0 million in the second quarter of last year. For the six-month year-to-date periods, R&D increased by $2.4 million from $9.6 million last year to $12.0 million this year. These increases were due primarily to LoJack R&D expense.

Consolidated selling expense increased by $6.8 million to $12.7 million in the second quarter of this year compared to $5.8 million in the second quarter of last year due primarily to the LoJack acquisition, which accounted for $6.6 million of the increase. The remaining increase was due to higher payroll expense as a result of additional sales and marketing personnel and stock compensation expenses. For the six month year-to-date periods, selling expenses increased by $12.6 million to $24.0 million due to the same factors cited above for the three month periods. The LoJack acquisition accounted for $11.6 million of the increase for the six month year-to-date periods.

Consolidated general and administrative (“G&A”) expenses increased by $6.4 million to $11.3 million in the second quarter of this year compared to $4.9 million in the second quarter of last year due primarily to the LoJack G&A expenses, which accounted for $5.6 million of the increase. The remaining increase in G&A expenses was due to higher legal expenses related to two patent infringement lawsuits. For the six month periods, consolidated G&A increased from last year by $17.6 million to $27.3 million this year due primarily to the LoJack G&A expenses, which accounted for $11.7 million of the increase. Also, transaction and integration expenses for the LoJack acquisition were $3.5 million in the first half of this year. The remaining increase in G&A expenses for the six month periods was due to higher legal expenses related to two patent infringement lawsuits and higher stock compensation expenses.

Amortization of intangibles increased from $1.7 million in the second quarter of last year to $3.9 million in the second quarter of this year. For the six month periods, amortization of intangibles increased from $3.3 million last year to $7.3 million this year. These increases were due to the amortization of new intangibles associated with the acquisition of LoJack in the fiscal 2017 first quarter.

Non-operating Expense, Net

Investment income was $455,000 in the second quarter of this year compared to investment loss of $43,000 last year, due to investment income on Rabbi Trust assets and dividend income of $114,000 received from a minority-owned LoJack licensee. Investment income increased to $908,000 in the six months ended August 31, 2016 compared to investment loss of $15,000 in the comparable period of the prior year for the same reasons cited above for the three month periods, in addition to an increase in investment income on cash equivalents and marketable securities.

Interest expense increased to $2.5 million in the second quarter of this year compared to $2.3 million in the second quarter of last year, and increased to $4.9 million in the six months ended August 31, 2016 compared to $2.9 million in the six months ended August 31, 2015 due to interest expense associated with the convertible notes issued in May 2015.

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See Note 14 to the accompanying unaudited consolidated financial statements for additional information on investment income and interest expense.

Income Tax Provision

The Company evaluates its estimated annual effective tax rate (“ETR”) on a quarterly basis based on current and forecasted operating results. The relationship between the Company’s income tax provision or benefit and its pretax book income or loss can vary significantly from period to period considering, among other factors, the overall level of pretax book income or loss and changes in the blend of income or loss that is taxed at high effective rates domestically versus pretax book income or loss that is taxed at low effective rates internationally. Consequently, the Company’s ETR may fluctuate significantly period to period and may make quarterly comparisons less than meaningful.

The effective income tax rate was 15% in the six months ended August 31, 2016, which is lower than the statutory U.S. federal income tax rate of 35% due primarily to certain undistributed foreign earnings, a substantial portion of which was generated by the Company’s Ireland subsidiary, for which no U.S. taxes are provided because such earnings are intended to be indefinitely reinvested outside the U.S. The lower effective tax rate during the second quarter and first six months of fiscal 2017 as compared to the same periods in fiscal 2016 is due primarily to a different geographic mix of earnings.

LIQUIDITY AND CAPITAL RESOURCES

In June 2016, the Company’s Board of Directors authorized a share repurchase program, under which the Company may repurchase up to $25 million of its outstanding common stock. Under the stock repurchase program, the Company may repurchase shares in open market purchases in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The extent to which CalAmp repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by CalAmp’s management team. The repurchase program may be suspended or discontinued at any time. The Company expects to finance the purchases with existing cash balances.

During the three and six months ended August 31, 2016, the Company repurchased 0.6 million shares of its common stock at an average share cost of $14.57, including commissions. The total cost of the share repurchases during the three and six months ended August 31, 2016 was $8.5 million. All of the share repurchases were paid for as of August 31, 2016. All common stock repurchased was retired as of August 31, 2016. Of the $25 million authorized for share repurchases, $16.5 million is remaining as of August 31, 2016.

In March 2016 the Company completed the acquisition of LoJack. The Company funded the acquisition from cash on hand. The total purchase price was $131.7 million which included the $5.5 million fair value of 850,100 shares of LoJack common stock that were purchased by CalAmp in the open market in November and December 2015, prior to entering into a definitive acquisition agreement with LoJack.

In May 2015, the Company issued $172.5 million aggregate principal amount of 1.625% convertible senior unsecured notes due May 15, 2020. The Company has used, and expects to continue to use, the remaining net proceeds from the offering of the convertible notes for general corporate purposes including, but not limited to, acquisitions or other strategic transactions, working capital and repurchases of the Company’s stock.

The Company has a credit facility with Square 1 Bank that provides for borrowings up to $15 million or 85% of eligible accounts receivable, whichever is less. The credit facility expires on March 1, 2017. Borrowings under this line of credit bear interest at the bank’s prime rate. There were no borrowings outstanding under this credit facility at August 31, 2016 or February 29, 2016.

The Square 1 Bank credit facility contains financial covenants that require the Company to maintain a minimum level of earnings before interest, income taxes, depreciation, amortization and other noncash charges (“EBITDA”) and a minimum debt coverage ratio, both measured monthly on a rolling 12-month basis. At August 31, 2016, the Company was in compliance with its debt covenants under the credit facility.

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The Company’s primary sources of liquidity are its cash, cash equivalents, marketable securities and the line of credit with Square 1 Bank. During the six months ended August 31, 2016, cash and cash equivalents decreased by $44.7 million. The decrease was primarily due to the cash used for the acquisition of LoJack, net of cash acquired, of $117.0 million. Other uses of cash were common stock repurchases of $8.5 million, capital expenditures of $3.5 million, taxes paid related to net share settlement of vested equity awards of $1.4 million, and advances to an unconsolidated affiliate of $0.7 million. Offsetting these uses of cash and cash equivalents was cash provided by operations of $19.3 million, proceeds from maturities of marketable securities of $66.4 million, and proceeds from stock option exercises of $0.8 million.

Contractual Cash Obligations

The following is a summary of the Company’s contractual cash obligations at August 31, 2016 (in thousands):

Future Estimated Cash Payments Due by Fiscal Year
2017
      (remainder)     2018     2019     2020     2021     Thereafter     Total
Convertible senior notes principal $  - $ - $ - $  - $ 172,500 $ - $ 172,500
Convertible senior notes stated interest 1,402 2,803 2,803 2,803 1,402 - 11,213
Operating leases 3,621 6,109 4,656 3,013 1,559 3,712 22,670
Purchase obligations 30,325 - - - - - 30,325
Other contractual commitments 2,650 - - - - - 2,650
Total contractual obligations $    37,998 $     8,912 $     7,459 $     5,816 $     175,461 $     3,712 $     239,358

Purchase obligations consist primarily of inventory purchase commitments.

FORWARD LOOKING STATEMENTS

Forward looking statements in this Form 10-Q which include, without limitation, statements relating to the Company’s plans, strategies, objectives, expectations, intentions, projections and other information regarding future performance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “may”, “will”, “could”, “plans”, “intends”, “seeks”, “believes”, “anticipates”, “expects”, “estimates”, “judgment”, “goal”, and variations of these words and similar expressions, are intended to identify forward-looking statements. These forward-looking statements reflect the Company’s current views with respect to future events and financial performance and are subject to certain risks and uncertainties, including, without limitation, product demand, competitive pressures and pricing declines in the Company’s markets, the timing of customer approvals of new product designs, intellectual property infringement claims, interruption or failure of our Internet-based systems used to wirelessly configure and communicate with the tracking and monitoring devices that we sell, the risk that we do not repurchase some or all of the shares we anticipate purchasing pursuant to our repurchase program and other risks and uncertainties that are set forth in Part I, Item 1A of the Annual Report on Form 10-K for the year ended February 29, 2016 as filed with the Securities and Exchange Commission on April 20, 2016. Such risks and uncertainties could cause actual results to differ materially from historical or anticipated results. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be attained. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk

The Company has international operations, giving rise to exposure to market risks from changes in foreign exchange rates. A cumulative foreign currency translation loss of $850,000 related to the Company’s foreign subsidiaries is included in accumulated other comprehensive income (loss) in the stockholders’ equity section of the consolidated balance sheet at August 31, 2016. The aggregate foreign currency transaction exchange rate gains (losses) included in determining income (loss) before income taxes and equity in net loss of affiliate were $405,000 and $(29,000) in the six months ended August 31, 2016 and 2015, respectively.

Interest Rate Risk

The Company’s exposure to market rate risk for changes in interest rates relates primarily to its investment portfolio. The primary objective of the Company’s investment activities is to preserve principal and liquidity while at the same time maximizing yields without significantly increasing risk. To achieve this objective, the Company maintains its portfolio of short-term and long-term investments in a variety of available-for-sale fixed debt securities, including both government and corporate obligations and money market funds. Investments in fixed rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in prevailing interest rates. Due in part to these factors, the Company may suffer losses in principal if it needs the funds prior to maturity and chooses to sell securities that have declined in market value due to changes in interest rates or perceived credit risk related to the securities’ issuers.

The Company has variable-rate bank debt. A fluctuation of one percent in the interest rate on the $15 million credit facility with Square 1 Bank would have an annual impact of approximately $150,000 on the Company’s results of operations assuming that the full amount of the facility was borrowed. There were no borrowings outstanding on this facility at August 31, 2016.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s principal executive officer and principal financial officer have concluded, based on their evaluation of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, (the “Exchange Act”)) as of the end of the period covered by this report, that the Company’s disclosure controls and procedures are effective to ensure that the information required to be disclosed in reports that are filed or submitted under the Exchange Act is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and that such information is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

Internal Control Over Financial Reporting

In March 2016, the Company acquired LoJack and, as a result, the Company has begun integrating the processes, systems and controls relating to LoJack into its existing system of internal control over financial reporting in accordance with its integration plans. Except for the processes, systems and controls relating to the integration of LoJack, there have not been any changes in the Company’s internal control over financial reporting that occurred during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 16 – Commitments and Contingencies of the Notes to Unaudited Financial Statements above for information regarding the legal proceedings in which the Company is involved.

ITEM 1A. RISK FACTORS

The reader is referred to Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended February 29, 2016, as filed with the Securities and Exchange Commission on April 20, 2016, for a discussion of factors that could materially affect the Company’s business, financial condition, results of operations, or future results.

ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS

The following table contains information with respect to purchases made by or on behalf of CalAmp or any “affiliated purchaser” (as defined in Rule 10b-18(a) (3) under the Securities Exchange Act of 1934), of the Company’s common stock during our second quarter ended August 31, 2016.

Maximum
Total Number of Number (or
Shares Approximate
Purchased as Dollar Value) of
  Average Part of Publicly Shares that may
Total Number of Price Announced be Purchased
Shares Paid per Plans or Under the Plans
      Purchased       Share (1)       Programs       or Programs (2)
June 1 - June 30, 2016 15,000 $ 14.59 15,000 $ 24,781,168
July 1 - July 31, 2016 300,000 $ 14.29 300,000 $ 20,495,643
August 1 - August 31, 2016 265,100 $ 14.89 265,100 $ 16,548,917
Total 580,100 $     14.57 580,100 $     16,548,917

       (1)        Average price paid per share for shares purchased as part of the Company’s share repurchase program (includes brokerage commissions).
 
(2) As announced on June 28, 2016, the Company's Board of Directors approved a share repurchase program of up to $25 million of its outstanding common stock. As of August 31, 2016, $8.5 million of the $25 million had been utilized. The remaining $16.5 million in the table represents the amount available to repurchase shares under the authorized repurchase program as of August 31, 2016. The Company’s share repurchase program does not obligate it to acquire any specific number of shares. Under the program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.

ITEM 6. EXHIBITS

      Exhibit 31.1       Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
Exhibit 31.2 Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
Exhibit 32 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
101.INS XBRL Instance Document
 
101.SCH XBRL Taxonomy Extension Schema Document
 
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
   
101.LAB XBRLTaxonomy Extension Label Linkbase Document
   
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
   
101.DEF XBRL Taxonomy Extension Definition Linkbase Document

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

  CALAMP CORP.
 
 
September 29, 2016   /s/ Richard Vitelle  
     Date Richard Vitelle
Executive Vice President & CFO
(Principal Financial Officer and
Chief Accounting Officer)

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EX-31.1 2 calamp29882137-ex311.htm CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO SECTION 302

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a) AND RULE 15d-14(a)
OF THE SECURITIES EXCHANGE ACT, AS AMENDED

I, Michael Burdiek, certify that:

       1.       I have reviewed this Quarterly Report on Form 10-Q of CalAmp Corp.;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
      a)       Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
  
       5.       The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
      a)       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
September 29, 2016           /s/ Michael Burdiek  
     Date   Michael Burdiek
Chief Executive Officer


EX-31.2 3 calamp29882137-ex312.htm CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO SECTION 302

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a) AND RULE 15d-14(a)
OF THE SECURITIES EXCHANGE ACT, AS AMENDED

I, Richard Vitelle, certify that:

       1.       I have reviewed this Quarterly Report on Form 10-Q of CalAmp Corp.;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
      a)       Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
  
       5.       The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
      a)       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
September 29, 2016           /s/ Richard Vitelle  
     Date   Richard Vitelle
Chief Financial Officer


EX-32 4 calamp29882137-ex32.htm CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CalAmp Corp. (the "Company") on Form 10-Q for the quarter ended August 31, 2016 as filed with the Securities and Exchange Commission (the "Report"), we, Michael Burdiek, Chief Executive Officer of the Company, and Richard Vitelle, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

        (1)        The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
/s/ Michael Burdiek  
Michael Burdiek
Chief Executive Officer
 
 
/s/ Richard Vitelle  
Richard Vitelle
Chief Financial Officer

September 29, 2016

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.


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(&#147;CalAmp&#148; or the &#147;Company&#148;) is a leading provider of wireless communications solutions for a broad array of applications to customers globally. The Company&#146;s business activities are organized into its Wireless DataCom and Satellite business segments. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In March 2016, the Company completed the acquisition of all outstanding shares of common stock of LoJack Corporation (&#147;LoJack&#148;), a global leader in products and services for tracking and recovering cars, trucks and other valuable mobile assets. See Note 2 for a description of this acquisition. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">Up to and including the quarter ended August 31, 2016, products of the Company's Satellite segment were sold to EchoStar, an affiliate of Dish Network, for incorporation into complete subscription satellite television systems. In April 2016, EchoStar notified the Company that it would stop purchasing products from the Company at the end of its then-current product demand forecast as a result of a consolidation of its supplier base. EchoStar&#146;s product demand forecast with the Company extended through August 2016, and the products covered by this forecast were substantially all shipped prior to August 31, 2016. In light of the fact that EchoStar accounted for essentially all of the revenues of the Satellite segment, the Company&#146;s Satellite business was shut down effective August 31, 2016. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">Certain notes and other information included in the Company&#146;s Annual Report on Form 10-K are condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the Company&#146;s 2016 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on April 20, 2016. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In the opinion of the Company&#146;s management, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the Company&#146;s financial position at August 31, 2016 and its results of operations for the three and six months ended August 31, 2016 and 2015. The results of operations for such periods are not necessarily indicative of results to be expected for the full fiscal year. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">All significant intercompany transactions and accounts have been eliminated in consolidation.</font></p> <p style="text-align: justify"><b><font style="font: x-small Times New Roman">Revenue Recognition </font></b></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">The Company recognizes revenue from product sales when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection of the sales price is reasonably assured. Generally, for product sales that are not bundled with an application service these criteria are met at the time product is shipped, except for shipments made on the basis of &#147;FOB Destination&#148; terms, in which case title transfers to the customer and the revenue is recorded by the Company when the shipment reaches the customer. Customers generally do not have a right of return except for defective products returned during the warranty period. The Company records estimated commitments related to customer incentive programs as reductions of revenues. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In addition to product sales, the Company provides Software as a Service (SaaS) subscriptions for its fleet management and vehicle telematics applications through which customers are provided with the ability to wirelessly communicate with monitoring devices installed in vehicles and other mobile or remote assets via software applications hosted by the Company. Generally, the Company defers the recognition of revenue for the products that are sold with application subscriptions because the products are not functional without the application services. In such circumstances, the associated product costs are recorded as deferred costs in the balance sheet. The deferred product revenue and deferred product cost amounts are amortized to application subscriptions revenue and cost of revenue on a straight-line basis over minimum contractual subscription periods of one to five years. Revenues from renewals of data communication services after the initial contract term are </font><font style="font: x-small Times New Roman">recognized as application subscriptions revenue when the services are provided. When customers prepay application subscription renewals, such amounts are recorded as deferred revenues and are recognized ratably over the renewal term.</font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In the United States, the Company generally recognizes revenue on LoJack product sales that have no associated continuing service obligations on the part of the Company upon installation of the products. Revenue relating to sales made to the Company&#146;s third party installation partners, who purchase the Company&#146;s products and perform installations themselves, is recognized upon shipment, which is prior to the installation of the related products in the end user&#146;s vehicle. Revenue from the sales of products to international licensees is recognized upon shipment of the products to the licensee or when payment becomes reasonably assured, whichever is later.</font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In Italy, the purchase of an initial monitoring service contract is a requirement at the time the consumer purchases a LoJack product. Revenue is recognized over the life of the contract. These contracts, which are sold separately from the LoJack hardware, are offered for terms ranging from 12 to 60 months and are generally payable in full upon activation of the related unit or renewal of a previous contract. Customers are also offered a month-to-month option for service contracts. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">The Company offers several types of extended warranty contracts in the United States. For those contracts for which an independent third party insurer, and not the Company, is the primary obligor, the Company recognizes revenue at the time of the sale of the warranty. For those warranty products to which the Company is the primary obligor, revenue is deferred and is recognized over five years, which is the estimated life of new vehicle ownership. For the majority of extended warranty contracts originated after 2011, the Company recognizes revenue at the time of sale. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">For those warranties for which an independent third party insurer, and not the Company, is the primary obligor, the Company records revenue on a gross basis, with related costs being included in cost of goods sold. The Company considered the factors for gross and net revenue recording and determined that despite not being the primary obligor for the majority of these arrangements, gross revenue reporting was appropriate based on the relevant accounting guidance. Specifically, the Company has latitude in establishing price; it can change the product offering; it has discretion in supplier selection; it is involved in the determination of product or service specifications; it bears the credit risk; and the amount that it earns on each contract is not fixed.</font></p> <p style="text-align: justify"><b><font style="font: x-small Times New Roman">Cash and Cash Equivalents </font></b></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">The Company considers all highly liquid investments with remaining maturities at date of purchase of three months or less to be cash equivalents. </font></p> <p style="text-align: justify"><b><font style="font: x-small Times New Roman">Fair Value Measurements</font></b></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly manner in an arms-length transaction between market participants at the measurement date. 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The aggregate foreign currency transaction exchange rate gains (losses) included in determining income (loss) before income taxes and equity in net loss of affiliate were $405,000 and $(29,000) in the six months ended August 31, 2016 and 2015, respectively. </font></p> <p style="text-align: justify"><b><font style="font: x-small Times New Roman">Recently Issued Accounting Standards </font></b></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In March 2016, the Financial Accounting Standards Board (&#147;FASB&#148;) issued Accounting Standards Update 2016-09, Compensation &#151; Stock Compensation: Improvements to Employee Share-Based Payment Accounting (&#147;ASU 2016-09&#148;). This update is intended to simplify the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. 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width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">2,220</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160;&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">1,679</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160;&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">216</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160;&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">1,895</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160;&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">325</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160;&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">541</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 61%"><font style="font: x-small Times New Roman">Developed technology</font></td> <td nowrap="nowrap" style="text-align: left; width: 3%"></td> <td nowrap="nowrap" style="text-align: left; width: 3%"><font style="font: x-small Times New Roman">2-7 years</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">14,080</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 3%"><font style="font: x-small Times New Roman">8,200</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">22,280</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">6,427</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">1,913</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">8,340</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">13,940</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">7,653</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 61%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">Tradenames</font></td> <td nowrap="nowrap" style="text-align: left; width: 3%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">7-10 years</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">2,143</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">35,500</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">37,643</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">1,522</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">1,778</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">3,300</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">34,343</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">621</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 61%"><font style="font: x-small Times New Roman">Customer lists</font></td> <td nowrap="nowrap" style="text-align: left; width: 3%"></td> <td nowrap="nowrap" style="text-align: left; width: 3%"><font style="font: x-small Times New Roman">4-7 years</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">18,300</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 3%"><font style="font: x-small Times New Roman">4,650</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">22,950</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">10,358</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">2,305</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">12,663</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">10,287</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">7,942</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 61%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">Dealer relationships</font></td> <td nowrap="nowrap" style="text-align: left; width: 3%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">7 years</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">-</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">16,850</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">16,850</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">-</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">1,104</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">1,104</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">15,746</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">-</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 61%"><font style="font: x-small Times New Roman">Covenants not to compete</font></td> <td nowrap="nowrap" style="text-align: left; width: 3%"></td> <td nowrap="nowrap" style="text-align: left; width: 3%"><font style="font: x-small Times New Roman">5 years</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">170</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 3%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">170</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">128</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">18</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">146</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">24</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">42</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 61%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">Patents</font></td> <td nowrap="nowrap" style="text-align: left; width: 3%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">5 years</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">273</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">52</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">325</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">62</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">12</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">74</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">251</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">211</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 61%"></td> <td nowrap="nowrap" style="text-align: left; width: 3%"></td> <td nowrap="nowrap" style="text-align: left; width: 3%"></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: right; width: 2%"><font style="font: x-small Times New Roman">37,186</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: right; width: 3%"><font style="font: x-small Times New Roman">65,252</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: right; width: 2%"><font style="font: x-small Times New Roman">102,438</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; 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</font></td> <td nowrap="nowrap" style="text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">7,730</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" colspan="2" style="text-align: left; width: 95%"><font style="font: x-small Times New Roman">2018</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%">&#160;</td> <td nowrap="nowrap" style="text-align: right; width: 3%"><font style="font: x-small Times New Roman">15,005</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" colspan="2" style="text-align: left; width: 95%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">2019</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">11,660</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" colspan="2" style="text-align: left; 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width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160; &#160;&#160;&#160;&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">172,500</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 89%"><font style="font: x-small Times New Roman">Less: Unamortized debt discount</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%">&#160;</td> <td nowrap="nowrap" style="text-align: right; width: 3%"><font style="font: x-small Times New Roman">(25,933</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"><font style="font: x-small Times New Roman">)</font></td> <td nowrap="nowrap" style="text-align: left; 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background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman"></font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman"></font></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0">&#160;</td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0">&#160;</td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">181,626</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">119,645</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman"></font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">15,592</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 2%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">135,237</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 59%"><font style="font: x-small Times New Roman">Gross profit</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">68,719</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">3,729</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman"></font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="text-align: right; 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width: 2%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">48,829</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 59%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">Gross margin</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">41.3</font></td> <td nowrap="nowrap" style="text-align: left; 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width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"><font style="font: x-small Times New Roman">$&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">2,777</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"><font style="font: x-small Times New Roman">$&#160;&#160; &#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">(2,254</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"><font style="font: x-small Times New Roman">)</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">14,942</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td></tr></table></div><br /> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">The Company considers operating income to be a primary measure of operating performance of its business segments. The amount shown for each period in the &#147;Corporate Expenses&#148; column above consists of expenses that are not allocated to the business segments. These non-allocated corporate expenses include salaries and benefits of certain corporate staff and expenses such as audit fees, investor relations, stock listing fees, director and officer liability insurance, and director fees and expenses.</font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">Products of the Company's Satellite segment were sold to EchoStar. In August 2016, EchoStar ceased purchasing products from CalAmp and the Satellite business was shut down effective August 31, 2016. Historically, shared service expenses for accounting, human resources, information technology and legal administration have been allocated to the two reporting segments. Any such shared expenses that will not be eliminated in future periods as a result of the shutdown of the Satellite business have been reclassified in the segment information for all periods presented from the Satellite segment to the Wireless DataCom segment, with no effect on total operating income. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In fiscal 2016 and the first half of fiscal 2017, Satellite segment revenues accounted for only 14% and 8%, respectively, of the Company&#146;s consolidated revenues. After giving retroactive effect to the reclassification of general and administration expense from the Satellite segment to the Wireless DataCom segment for shared service expenses that will not be eliminated as a result of the Satellite business shutdown, Satellite segment operating income in fiscal 2016 and the first half of fiscal 2017 represented 23% and 20%, respectively, of total business unit operating income, excluding corporate expenses not allocated to the business units of $6,480,000 and $5,751,000 in fiscal 2016 and the first half of fiscal 2017. Also, as a result of transitioning the Satellite business to a variable cost operating model in fiscal 2012, in which all DBS product manufacturing was moved to a contract manufacturer, assets and liabilities of the Satellite segment represented only about 2% of consolidated assets and liabilities at the end of fiscal 2016. Accordingly, CalAmp believes that the shutdown of the Satellite segment does not qualify for discontinued operations accounting treatment because it represents neither a strategic shift nor did it have or will it have a major impact on the Company&#146;s business or consolidated financial statements.</font>&#160;</p> <p style="text-align: justify; text-indent: 15pt"></p> -624000 -109000 -8000 -16000 -2770000 7558000 396000 3499000 <p style="text-align: justify"><b><font style="font: x-small Times New Roman">NOTE 16 - COMMITMENTS AND CONTINGENCIES </font></b></p> <p style="text-align: justify"><b><font style="font: x-small Times New Roman">Lease Commitments </font></b></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">A summary of future payments of operating lease commitments is as follows (dollars in thousands): </font></p> <div align="center"> <table cellspacing="0" cellpadding="0" border="0" style="width: 60%; line-height: 14pt; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 95%; background-color: #c0c0c0"><b><font style="font: x-small Times New Roman">2017 (remainder)</font></b></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160;&#160;&#160;&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">3,621</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 95%"><b><font style="font: x-small Times New Roman">2018</font></b></td> <td nowrap="nowrap" style="text-align: left; width: 1%">&#160;</td> <td nowrap="nowrap" style="text-align: right; width: 3%"><font style="font: x-small Times New Roman">6,109</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 95%; background-color: #c0c0c0"><b><font style="font: x-small Times New Roman">2019</font></b></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">4,656</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 95%"><b><font style="font: x-small Times New Roman">2020</font></b></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 3%"><font style="font: x-small Times New Roman">3,013</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 95%; background-color: #c0c0c0"><b><font style="font: x-small Times New Roman">2021</font></b></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">1,559</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 95%"><b><font style="font: x-small Times New Roman">Thereafter</font></b></td> <td nowrap="nowrap" style="text-align: left; width: 1%; border-bottom: Black 1pt solid"></td> <td nowrap="nowrap" style="text-align: right; width: 3%; border-bottom: Black 1pt solid"><font style="font: x-small Times New Roman">3,712</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 95%; background-color: #c0c0c0"><b><font style="font: x-small Times New Roman">Total</font></b></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0; border-bottom: Black 2pt double"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="text-align: right; width: 3%; background-color: #c0c0c0; border-bottom: Black 2pt double"><font style="font: x-small Times New Roman">22,670</font></td></tr></table></div><br /> <p style="text-align: justify"><b><font style="font: x-small Times New Roman">Legal Proceedings </font></b></p> <p style="text-align: justify; text-indent: 15pt"><b><u><font style="font: x-small Times New Roman">Omega patent infringement claim</font></u></b><b><font style="font: x-small Times New Roman"> </font></b></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In December 2013, a patent infringement lawsuit was filed against the Company by Omega Patents, LLC, (&#147;Omega&#148;), a non-practicing entity. Omega alleged that certain of the Company&#146;s vehicle tracking products infringed on certain patents asserted by Omega. On February 24, 2016, a jury in the U.S. District Court for the Middle District of Florida awarded Omega damages of $2.9 million, for which CalAmp recorded a full reserve in the fiscal 2016 fourth quarter. Following trial, Omega brought a motion seeking entry of judgment, an injunction and requesting the court to exercise its discretion to treble damages and assess attorneys&#146; fees. The Company filed an opposition to Omega&#146;s motion, and the judge&#146;s ruling has not yet been rendered. Motions for judgment as a matter of law and a new trial have not yet been filed because no judgment has been entered. If, following resolution of all post-trial motions, judgment is ultimately entered in Omega&#146;s favor, CalAmp intends to pursue an appeal at the Court of Appeals for the Federal Circuit. In addition to its appeal, CalAmp is seeking to invalidate a number of Omega&#146;s patents in actions filed with the U.S. Patent and Trademark Office. Notwithstanding the adverse jury verdict, the Company continues to believe that its products do not infringe Omega&#146;s patents and that Omega&#146;s patents are not valid, and accordingly CalAmp intends to continue pursuing its judicial and administrative options. While it is not feasible to predict with a high degree of certainty the outcome of this litigation, its ultimate resolution could be material to CalAmp&#146;s cash flows and results of operations. Furthermore, if an injunction is issued by the court, the Company could be prevented from manufacturing and selling a number of its products, which could have a material adverse effect on the Company&#146;s business, results of operations, financial condition and cash flows.</font></p> <p style="text-align: justify; text-indent: 15pt"><b><u><font style="font: x-small Times New Roman">Orbcomm patent infringement claim</font></u></b><font style="font: x-small Times New Roman"> </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">On April 7, 2016, a patent infringement lawsuit was filed against the Company by Orbcomm Inc. (&#147;Orbcomm&#148;) in the U.S. District Court for the Eastern District of Virginia. Orbcomm alleged that certain of the Company&#146;s systems for tracking, monitoring, and controlling vehicles, machinery, and other assets infringed on certain patents asserted by Orbcomm. Orbcomm has not yet made a specific damages claim, but seeks compensatory damages, treble damages, and an injunction. The Company believes that its products and services do not infringe Orbcomm&#146;s patents</font><font style="font: x-small Times New Roman"> </font><font style="font: x-small Times New Roman">and/or that Orbcomm&#146;s patents are invalid. On May 27, 2016, the Company filed a motion to dismiss Orbcomm&#146;s claims on the basis, </font><i><font style="font: x-small Times New Roman">inter alia</font></i><font style="font: x-small Times New Roman">, that Orbcomm&#146;s patents are directed at ineligible subject matter and are therefore invalid under 35 U.S.C. &#167; 101. On July 22, 2016, the court denied CalAmp&#146;s motion; however, in light of new Federal Circuit case law, CalAmp filed a motion for reconsideration of its motion to dismiss, and the court has received briefs and scheduled an oral argument, regarding certain aspects of CalAmp&#146;s motion, for October 13, 2016. Regardless of the outcome of its motion to dismiss, the Company intends to vigorously defend itself against Orbcomm&#146;s claims. In addition, on July 19, 2016, CalAmp filed with the court its first amended answer to Orbcomm&#146;s complaint, which included an affirmative defense and a counterclaim alleging that Orbcomm&#146;s patents were unenforceable due to inequitable conduct. Orbcomm then filed a motion to dismiss CalAmp&#146;s inequitable conduct counterclaim and to strike CalAmp&#146;s inequitable conduct defense. On September 9, 2016, the court denied Orbcomm&#146;s motion to dismiss and strike. At this early stage of the lawsuit, it is not feasible to predict with any certainty the outcome of this litigation, and the Company has made no accrual for this claim.</font></p> <p style="text-align: justify; text-indent: 15pt"><b><u><font style="font: x-small Times New Roman">G.L.M. contract claim</font></u></b><font style="font: x-small Times New Roman"> </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">On October 13, 2010, a suit was filed by G.L.M. Security &#38; Sound, Inc. (&#147;G.L.M.&#148;) against LoJack in the United States District Court for the Eastern District of New York (the &#147;Court&#148;) alleging breach of contract, misrepresentation, and violation of the New York franchise law, Mass. Gen. Laws c. 93A and the Robinson-Patman Act, among other claims. G.L.M. sought damages of $10,000,000, punitive damages, interest and attorney&#146;s fees, and treble damages. On September 19, 2014, the Court entered summary judgment in favor of LoJack on G.L.M&#146;s three remaining claims for breach of contract, breach of the duty of good faith and fair dealing, and violation of Mass. Gen. Laws c. 93A. The Court denied G.L.M.&#146;s attempt to amend its complaint on the basis of futility and undue delay. The Court also entered summary judgment in favor of LoJack on its counterclaim for breach of contract. On August 21, 2015, the Court issued a Memorandum and Opinion with respect to LoJack&#146;s claim for damages on its breach of contract counterclaim. The Court found that LoJack is entitled to recover damages and interest on its counterclaim in the total amount of $1.9 million. The Court ordered that judgment enter in that amount and that the case be closed. On August 25, 2015, the clerk of the Court entered judgment in LoJack&#146;s favor. On September 23, 2015, G.L.M. filed a notice of appeal in the Court of Appeals for the Second Circuit. On August 2, 2016, the Second Circuit issued a Mandate on the Summary Order affirming the Court&#146;s August 15, 2015 judgment. The Company is now embarking on collecting its judgment, but there can be no assurances that the Company will be able to recover the full amount of the judgment, if any. </font></p> <p style="text-align: justify; text-indent: 15pt"><b><u><font style="font: x-small Times New Roman">EVE battery claim</font></u></b><font style="font: x-small Times New Roman"> </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">LoJack was notified in 2013 by some of its international licensees that some of the batteries manufactured by LoJack&#146;s former battery supplier, EVE Energy Co., Ltd. (&#147;EVE&#148;), and included in self-powered LoJack units these licensees had purchased from LoJack, exhibited degraded performance below LoJack&#146;s quality standards. These notifications led LoJack to perform its own investigation. As a result of this investigation, LoJack confirmed that batteries manufactured by EVE that were included in certain self-powered LoJack units sold in the United States and to LoJack&#146;s international licensees were exhibiting a failure to power over a period of time that could impact the ability of the LoJack unit to transmit a signal when called upon for stolen vehicle recovery. LoJack manufactures both vehicle and self-powered (battery) units and this degraded performance potentially affects only the transmit battery pack in the self-powered units. As of the date of this report, the majority of LoJack units in circulation are vehicle powered. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">LoJack has incurred, and expects to continue to incur, costs and expenses related to the actions that it decided to take to address this matter. These costs and expenses may include, among others, those related to quality assurance programs, product or battery replacements, warranty claims, extension of product warranties, legal and other professional fees, litigation, and payments or other business concessions to LoJack&#146;s customers. Because of the ongoing nature of this matter, the Company cannot predict what other actions will be required, nor can it predict the outcome nor estimate the possible loss or range of loss with respect to any such actions. See Note 13 for the accrued warranty cost liability related to this matter. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">LoJack filed a formal claim under its relevant insurance policy and was paid $5,000,000. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">On October 27, 2014, LoJack and its wholly-owned subsidiary LoJack Ireland commenced arbitration proceedings against EVE by filing a notice of arbitration with a tribunal of with the Hong Kong International Arbitration Centre (the &#147;Tribunal&#148;). The filing alleges that EVE breached representations and warranties made in a supply agreement relating to the quality and performance of batteries supplied by EVE. The arbitration proceedings against EVE were held in Hong Kong on June 6 to 24, 2016. The Tribunal held an additional hearing on September 15 to 16, 2016, and the Tribunal has scheduled an additional hearing for January 9 to 10, 2017, focused on damages. The Company cannot predict the ultimate outcome of the arbitration proceedings or the amount of damages, if any, that the Company may be awarded by the Tribunal. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In addition to the foregoing matters, from time to time as a normal consequence of doing business, various claims and litigation may be asserted or commenced against the Company. In particular, the Company in the ordinary course of business may receive claims concerning contract performance, or claims that its products or services infringe the intellectual property of third parties. While the outcome of any such claims or litigation cannot be predicted with certainty, management does not believe that the outcome of any of such matters existing at the present time would have a material adverse effect on the Company&#146;s business, results of operations, financial condition and cash flows. </font></p> <p style="text-align: justify"><b><font style="font: x-small Times New Roman">LoJack Financing Recourse Agreement </font></b></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">LoJack&#146;s financing recourse agreement to certain automobile dealers represents the maximum potential amount of future payments under an agreement with a certain financing company. Pursuant to the recourse agreement, the Company will reimburse participating dealers the unamortized dealer cost of LoJack units purchased by customers via auto loans underwritten by the financing company upon a borrower&#146;s default within the initial 18 months of the auto loan. This agreement was renewed for the year ending December 31, 2016. Based on the unamortized cost of units sold and assuming the default of all borrowers, the Company&#146;s maximum potential amount of future payments under this agreement is $4.2 million as of August 31, 2016. The expected obligation is accrued based on sales to the participating dealers and historical loss experience. As of August 31, 2016, the Company had accrued $73,000 under these guarantees. Accruals for the financing recourse agreement are recorded as a reduction of revenue in the consolidated statement of operations. </font></p> false --02-28 2016-08-31 Accelerated Filer CalAmp Corp. 0000730255 2017 Q2 10-Q CAMP Yes 36332377 <p style="text-align: justify"><b><font style="font: x-small Times New Roman">NOTE 6 &#150; OTHER ASSETS </font></b></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">Other assets consist of the following (in thousands): </font></p> <div align="center"> <table cellspacing="0" cellpadding="0" border="0" style="line-height: 14pt; border-collapse: collapse; width: 60%"> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 91%"></td> <td nowrap="nowrap" colspan="2" style="text-align: center; width: 4%"><b><font style="font: x-small Times New Roman">August 31,</font></b></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" colspan="2" style="text-align: center; width: 4%"><b><font style="font: x-small Times New Roman">February 29,</font></b></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 91%"></td> <td nowrap="nowrap" colspan="2" style="border-bottom: #000000 1pt solid; text-align: center; width: 4%"><b><font style="font: x-small Times New Roman">2016</font></b></td> <td nowrap="nowrap" style="text-align: center; width: 1%">&#160;&#160;&#160;&#160;&#160; </td> <td nowrap="nowrap" colspan="2" style="border-bottom: #000000 1pt solid; text-align: center; width: 4%"><b><font style="font: x-small Times New Roman">2016</font></b></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 91%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">Deferred compensation plan assets</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160;&#160;&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">5,238</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160;&#160;&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">3,370</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 91%"><font style="font: x-small Times New Roman">Investment in international licensees</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 3%"><font style="font: x-small Times New Roman">2,327</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 3%"><font style="font: x-small Times New Roman">-</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 91%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">Equity investment in and loans to UK affiliate</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">1,124</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">1,167</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 91%"><font style="font: x-small Times New Roman">Other</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 3%"><font style="font: x-small Times New Roman">2,088</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 3%"><font style="font: x-small Times New Roman">637</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 91%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">Investment in LoJack common stock</font></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">-</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">5,466</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 91%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; border-bottom: Black 2pt double"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="text-align: right; width: 3%; border-bottom: Black 2pt double"><font style="font: x-small Times New Roman">10,777</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; border-bottom: Black 2pt double"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="text-align: right; width: 3%; border-bottom: Black 2pt double"><font style="font: x-small Times New Roman">10,640</font></td></tr></table></div><br /> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">Included in the assets of the LoJack acquisition are investments in international licensees at the preliminary valuation of $2,327,000 consisting of a 12.5% equity interest in LoJack&#146;s Mexican licensee of $1,541,000, a 17.5% equity interest in LoJack&#146;s Benelux licensee of $500,000, and a 5.5% interest in LoJack&#146;s French licensee of $286,000. The Company has not yet obtained all information required to complete the valuation of the Mexican and Benelux investments. The investment in LoJack&#146;s French licensee, in the form of a marketable equity security, is accounted for as an available-for-sale security and is valued at the quoted closing price of its market exchange as of the reporting date.</font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">The equity investment and loans to the Company&#146;s UK affiliate of $1,124,000 include a 49% equity interest in and loans to Smart Driver Club Limited. The investment is accounted for under the equity method since the Company has significant influence over the investee. The Company&#146;s equity in the net loss of this affiliate amounted to $684,000 for the six months ended August 31, 2016. In May 2016, the Company made a loan of $737,000 denominated in British pounds to Smart Driver Club Limited bearing interest at an annual interest rate of 8%, with principal and all unpaid interest due May 19, 2020. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">LoJack became a wholly-owned subsidiary of the Company in March 2016, at which time the investment of $5.5 million as of February 29, 2016 became part of the purchase price of the LoJack acquisition, as described in Note 2. </font></p> 152405000 113295000 75984000 58498000 29221000 21942000 14495000 11310000 181626000 984000 -984000 135237000 166557000 15069000 119645000 15592000 90479000 69808000 83807000 61819000 6672000 7989000 94375000 76560000 45486000 39223000 14803000 9848000 7379000 5282000 4032000 1675000 3605000 2609000 132000 119000 537000 362000 698000 495000 2238000 1633000 1621000 1389000 794000 842000 356000 198000 68000 54000 403000 295000 3460000 2019000 -1091000 4106000 1364000 -1814000 -2115000 -2043000 3906000 -2818000 -257000 1929000 9487000 -6864000 1185000 760000 -1649000 19316000 28762000 66419000 6634000 114010000 3527000 2576000 122432000 1500000 116982000 737000 737000 36000 -54863000 -111452000 172500000 5291000 31343000 15991000 1262000 1416000 2478000 780000 487000 -9087000 148604000 -44683000 65914000 <p style="text-align: justify"><b><font style="font: x-small Times New Roman">Description of Business </font></b></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">CalAmp Corp. (&#147;CalAmp&#148; or the &#147;Company&#148;) is a leading provider of wireless communications solutions for a broad array of applications to customers globally. The Company&#146;s business activities are organized into its Wireless DataCom and Satellite business segments. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In March 2016, the Company completed the acquisition of all outstanding shares of common stock of LoJack Corporation (&#147;LoJack&#148;), a global leader in products and services for tracking and recovering cars, trucks and other valuable mobile assets. See Note 2 for a description of this acquisition. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">Up to and including the quarter ended August 31, 2016, products of the Company's Satellite segment were sold to EchoStar, an affiliate of Dish Network, for incorporation into complete subscription satellite television systems. In April 2016, EchoStar notified the Company that it would stop purchasing products from the Company at the end of its then-current product demand forecast as a result of a consolidation of its supplier base. EchoStar&#146;s product demand forecast with the Company extended through August 2016, and the products covered by this forecast were substantially all shipped prior to August 31, 2016. In light of the fact that EchoStar accounted for essentially all of the revenues of the Satellite segment, the Company&#146;s Satellite business was shut down effective August 31, 2016. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">Certain notes and other information included in the Company&#146;s Annual Report on Form 10-K are condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the Company&#146;s 2016 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on April 20, 2016. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In the opinion of the Company&#146;s management, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the Company&#146;s financial position at August 31, 2016 and its results of operations for the three and six months ended August 31, 2016 and 2015. The results of operations for such periods are not necessarily indicative of results to be expected for the full fiscal year. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">All significant intercompany transactions and accounts have been eliminated in consolidation.</font></p> 122528000 236942000 40000 5238000 5238000 286000 286000 63000000 63000000 22299000 22299000 94705000 22299000 5524000 6890000 31665000 31665000 40000 6890000 3370000 3370000 5466000 5466000 130900000 130900000 82284000 1556000 80728000 8032000 42000 7990000 139388000 88718000 8836000 122474000 235925000 5171000 296000 63000000 22302000 6890000 31665000 40000 3753000 4050000 130900000 82300000 8032000 <p style="text-align: justify"><b><font style="font: x-small Times New Roman">Revenue Recognition </font></b></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">The Company recognizes revenue from product sales when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection of the sales price is reasonably assured. Generally, for product sales that are not bundled with an application service these criteria are met at the time product is shipped, except for shipments made on the basis of &#147;FOB Destination&#148; terms, in which case title transfers to the customer and the revenue is recorded by the Company when the shipment reaches the customer. Customers generally do not have a right of return except for defective products returned during the warranty period. The Company records estimated commitments related to customer incentive programs as reductions of revenues. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In addition to product sales, the Company provides Software as a Service (SaaS) subscriptions for its fleet management and vehicle telematics applications through which customers are provided with the ability to wirelessly communicate with monitoring devices installed in vehicles and other mobile or remote assets via software applications hosted by the Company. Generally, the Company defers the recognition of revenue for the products that are sold with application subscriptions because the products are not functional without the application services. In such circumstances, the associated product costs are recorded as deferred costs in the balance sheet. The deferred product revenue and deferred product cost amounts are amortized to application subscriptions revenue and cost of revenue on a straight-line basis over minimum contractual subscription periods of one to five years. Revenues from renewals of data communication services after the initial contract term are </font><font style="font: x-small Times New Roman">recognized as application subscriptions revenue when the services are provided. When customers prepay application subscription renewals, such amounts are recorded as deferred revenues and are recognized ratably over the renewal term.</font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In the United States, the Company generally recognizes revenue on LoJack product sales that have no associated continuing service obligations on the part of the Company upon installation of the products. Revenue relating to sales made to the Company&#146;s third party installation partners, who purchase the Company&#146;s products and perform installations themselves, is recognized upon shipment, which is prior to the installation of the related products in the end user&#146;s vehicle. Revenue from the sales of products to international licensees is recognized upon shipment of the products to the licensee or when payment becomes reasonably assured, whichever is later.</font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In Italy, the purchase of an initial monitoring service contract is a requirement at the time the consumer purchases a LoJack product. Revenue is recognized over the life of the contract. These contracts, which are sold separately from the LoJack hardware, are offered for terms ranging from 12 to 60 months and are generally payable in full upon activation of the related unit or renewal of a previous contract. Customers are also offered a month-to-month option for service contracts. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">The Company offers several types of extended warranty contracts in the United States. For those contracts for which an independent third party insurer, and not the Company, is the primary obligor, the Company recognizes revenue at the time of the sale of the warranty. For those warranty products to which the Company is the primary obligor, revenue is deferred and is recognized over five years, which is the estimated life of new vehicle ownership. For the majority of extended warranty contracts originated after 2011, the Company recognizes revenue at the time of sale. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">For those warranties for which an independent third party insurer, and not the Company, is the primary obligor, the Company records revenue on a gross basis, with related costs being included in cost of goods sold. The Company considered the factors for gross and net revenue recording and determined that despite not being the primary obligor for the majority of these arrangements, gross revenue reporting was appropriate based on the relevant accounting guidance. Specifically, the Company has latitude in establishing price; it can change the product offering; it has discretion in supplier selection; it is involved in the determination of product or service specifications; it bears the credit risk; and the amount that it earns on each contract is not fixed.</font></p> <p style="text-align: justify"><b><font style="font: x-small Times New Roman">Cash and Cash Equivalents </font></b></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">The Company considers all highly liquid investments with remaining maturities at date of purchase of three months or less to be cash equivalents. </font></p> 54000 1017000 67000 -10000 -3000 -383000 1416000 -16000 <p style="text-align: justify"><b><font style="font: x-small Times New Roman">Fair Value Measurements</font></b></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly manner in an arms-length transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:</font></p> <p style="text-align: justify; text-indent: 15pt"><i><font style="font: x-small Times New Roman">Level 1</font></i><font style="font: x-small Times New Roman"> &#150; Quoted prices in active markets for identical assets or liabilities. </font></p> <p style="text-align: justify; text-indent: 15pt"><i><font style="font: x-small Times New Roman">Level 2</font></i><font style="font: x-small Times New Roman"> &#150; Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.</font></p> <p style="text-align: justify; text-indent: 15pt"><i><font style="font: x-small Times New Roman">Level 3</font></i><font style="font: x-small Times New Roman"> &#150; Inputs that are generally unobservable and typically reflect management&#146;s estimate of assumptions that market participants would use in pricing the asset or liability.</font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has elected the fair value option for its investment in marketable securities on a contract-by-contract basis at the time each contract is initially recognized in the financial statements or upon an event that gives rise to a new basis of accounting for the items. </font></p> <p style="text-align: justify"><b><font style="font: x-small Times New Roman">Recently Issued Accounting Standards </font></b></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In March 2016, the Financial Accounting Standards Board (&#147;FASB&#148;) issued Accounting Standards Update 2016-09, Compensation &#151; Stock Compensation: Improvements to Employee Share-Based Payment Accounting (&#147;ASU 2016-09&#148;). This update is intended to simplify the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those fiscal years. The Company is currently evaluating the impact of adoption of the new standard on its consolidated financial statements. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases. The new standard establishes a right-of-use (&#147;ROU&#148;) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Early adoption is permitted. The Company is currently evaluating the impact of adoption of the new standard on its consolidated financial statements. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments&#150;Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (&#147;ASU 2016-01&#148;). This standard revises an entity&#146;s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments. Under the new guidance, entities will have to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. ASU 2016-01 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently evaluating the impact of this standard on its consolidated financial statements. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (&#147;ASU 2014-09&#148;). The revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of this revenue standard for periods beginning after December 15, 2016 to December 15, 2017, with early adoption permitted but not earlier than the original effective date. ASU 2014-09 must be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is continuing to evaluate the effect and methodology of adopting this accounting standard on its results of operations, cash flows and financial position. </font></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (&#147;ASU 2014-08&#148;). This update amends the definition of a discontinued operation, and requires additional disclosures about discontinued operations, as well as disposal transactions that do not meet the discontinued operations criteria. Under this new guidance, only disposals of a component representing a strategic shift in operations that has or will have a major impact on the Company&#146;s operations or financial results should be classified as discontinued operations. The effective date of this standard was March 1, 2015. See Note 15 which describes the effect of the adoption of this standard.</font></p> <p style="text-align: justify"><b><font style="font: x-small Times New Roman">NOTE 3 &#150; CASH, CASH EQUIVALENTS AND INVESTMENTS </font></b></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">The following tables summarize the Company&#146;s financial instrument assets as of August 31, 2016 and February 29, 2016 using the hierarchy described in Note 1 under the heading &#147;Fair Value Measurements&#148; (in thousands):</font></p> <table cellspacing="0" cellpadding="0" border="0" style="line-height: 14pt; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 87%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" colspan="18" style="border-bottom: #000000 1pt solid; text-align: center; width: 23%"><b><font style="font: x-small Times New Roman">As of August 31, 2016</font></b></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 87%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 3%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 3%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 2%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" colspan="8" style="text-align: center; width: 8%"><b><font style="font: x-small Times New Roman">Balance Sheet Classification</font></b></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 87%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 3%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 3%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 2%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" colspan="8" style="border-bottom: #000000 1pt solid; text-align: center; width: 8%"><b><font style="font: x-small Times New Roman">of Fair Value</font></b></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 87%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; 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width: 3%"><font style="font: x-small Times New Roman">67</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">5,238</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 1%"><font style="font: x-small Times New Roman">-</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 1%"><font style="font: x-small Times New Roman">-</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; 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width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; 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width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">286</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">-</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">-</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">286</font></td></tr> <tr> <td colspan="20" style="text-align: left; width: 111%; background-color: #c0c0c0">&#160;</td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 87%"><font style="font: x-small Times New Roman">Level 2:</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 3%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 3%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 87%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;Repurchase agreements</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; 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width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">63,000</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">-</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">-</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 87%"><font style="font: x-small Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;Corporate bonds</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 3%"><font style="font: x-small Times New Roman">22,302</font></td> <td nowrap="nowrap" style="border-bottom: Black 1pt none; text-align: left; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 3%"><font style="font: x-small Times New Roman">(3</font></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%"><font style="font: x-small Times New Roman">)</font></td> <td nowrap="nowrap" style="border-bottom: Black 1pt none; text-align: left; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; 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width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 2%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 2%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" colspan="8" style="text-align: center; width: 14%"><b><font style="font: x-small Times New Roman">Balance Sheet Classification</font></b></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 72%">&#160;</td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 2%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; 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width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160;&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">216</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160;&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">1,895</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160;&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">325</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160;&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">541</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 61%"><font style="font: x-small Times New Roman">Developed technology</font></td> <td nowrap="nowrap" style="text-align: left; width: 3%"></td> <td nowrap="nowrap" style="text-align: left; width: 3%"><font style="font: x-small Times New Roman">2-7 years</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">14,080</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 3%"><font style="font: x-small Times New Roman">8,200</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">22,280</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">6,427</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">1,913</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">8,340</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">13,940</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">7,653</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 61%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">Tradenames</font></td> <td nowrap="nowrap" style="text-align: left; width: 3%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">7-10 years</font></td> <td nowrap="nowrap" style="text-align: left; 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width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">1,522</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">1,778</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">3,300</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">34,343</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">621</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 61%"><font style="font: x-small Times New Roman">Customer lists</font></td> <td nowrap="nowrap" style="text-align: left; width: 3%"></td> <td nowrap="nowrap" style="text-align: left; width: 3%"><font style="font: x-small Times New Roman">4-7 years</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">18,300</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 3%"><font style="font: x-small Times New Roman">4,650</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">22,950</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">10,358</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">2,305</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">12,663</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">10,287</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">7,942</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 61%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">Dealer relationships</font></td> <td nowrap="nowrap" style="text-align: left; width: 3%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">7 years</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">-</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">16,850</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">16,850</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">-</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">1,104</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">1,104</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">15,746</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">-</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 61%"><font style="font: x-small Times New Roman">Covenants not to compete</font></td> <td nowrap="nowrap" style="text-align: left; width: 3%"></td> <td nowrap="nowrap" style="text-align: left; width: 3%"><font style="font: x-small Times New Roman">5 years</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">170</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 3%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">170</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">128</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">18</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">146</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">24</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="text-align: right; width: 2%"><font style="font: x-small Times New Roman">42</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 61%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">Patents</font></td> <td nowrap="nowrap" style="text-align: left; width: 3%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">5 years</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">273</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 3%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">52</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">325</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">62</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">12</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">74</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">251</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="border-bottom: #000000 1pt solid; text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">211</font></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 61%"></td> <td nowrap="nowrap" style="text-align: left; width: 3%"></td> <td nowrap="nowrap" style="text-align: left; width: 3%"></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: right; width: 2%"><font style="font: x-small Times New Roman">37,186</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: right; width: 3%"><font style="font: x-small Times New Roman">65,252</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: right; width: 2%"><font style="font: x-small Times New Roman">102,438</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: right; width: 2%"><font style="font: x-small Times New Roman">20,176</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: right; width: 2%"><font style="font: x-small Times New Roman">7,346</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: right; width: 2%"><font style="font: x-small Times New Roman">27,522</font></td> <td nowrap="nowrap" style="text-align: right; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: right; width: 2%"><font style="font: x-small Times New Roman">74,916</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: left; width: 1%"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="border-bottom: #000000 2pt double; text-align: right; width: 2%"><font style="font: x-small Times New Roman">17,010</font></td></tr></table></div><br /> <p style="text-align: justify"><b><font style="font: x-small Times New Roman">NOTE 2 &#150; LOJACK ACQUISITION </font></b></p> <p style="text-align: justify; text-indent: 15pt"><font style="font: x-small Times New Roman">In March 2016, the Company completed the acquisition of all outstanding shares of common stock of LoJack. 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The preliminary fair values of net tangible assets and intangible assets acquired were based upon preliminary valuations. The Company's estimates and assumptions reflected in such preliminary valuations are subject to change within the measurement period, which is up to one year from the acquisition date. The primary areas that remain preliminary relate to the fair values of intangible assets acquired, certain tangible assets and liabilities acquired, certain legal matters, deferred income taxes and goodwill. The Company expects to continue to obtain information to assist in determining the fair values of the net assets acquired during the measurement period. 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width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 2%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 85%">&#160;</td> <td nowrap="nowrap" style="text-align: left; width: 1%"></td> <td nowrap="nowrap" colspan="3" style="text-align: center; width: 4%"><b><font style="font: x-small Times New Roman">Currency</font></b></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td> <td nowrap="nowrap" style="text-align: center; width: 2%"></td> <td nowrap="nowrap" style="text-align: center; width: 1%"></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 85%"></td> <td nowrap="nowrap" style="text-align: left; width: 1%">&#160;&#160;&#160;&#160;&#160; </td> <td nowrap="nowrap" colspan="3" style="border-bottom: #000000 1pt solid; text-align: center; width: 4%"><b><font style="font: x-small Times New Roman">Translation</font></b></td> <td nowrap="nowrap" style="text-align: center; width: 1%">&#160;&#160;&#160;&#160;&#160; </td> <td nowrap="nowrap" colspan="3" style="border-bottom: #000000 1pt solid; text-align: center; width: 4%"><b><font style="font: x-small Times New Roman">Securities</font></b></td> <td nowrap="nowrap" style="text-align: center; width: 1%">&#160;&#160;&#160;&#160;&#160; </td> <td nowrap="nowrap" colspan="3" style="border-bottom: #000000 1pt solid; text-align: center; width: 4%"><strong><font style="font: x-small Times New Roman">Total</font></strong></td></tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap" style="text-align: left; width: 85%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">Balances at February 29, 2016</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">(226</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">)</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">$&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160; &#160;&#160; </font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">-</font></td> <td nowrap="nowrap" style="text-align: left; 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width: 85%; background-color: #c0c0c0"><font style="font: x-small Times New Roman">Balances at August 31, 2016</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0; border-bottom: #000000 2pt double"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0; border-bottom: #000000 2pt double"><font style="font: x-small Times New Roman">(850</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0; border-bottom: #000000 2pt double"><font style="font: x-small Times New Roman">)</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0; border-bottom: #000000 2pt double"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0; border-bottom: #000000 2pt double"><font style="font: x-small Times New Roman">(8</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0; border-bottom: #000000 2pt double"><font style="font: x-small Times New Roman">)</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0"></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0; border-bottom: #000000 2pt double"><font style="font: x-small Times New Roman">$</font></td> <td nowrap="nowrap" style="text-align: right; width: 2%; background-color: #c0c0c0; border-bottom: #000000 2pt double"><font style="font: x-small Times New Roman">(858</font></td> <td nowrap="nowrap" style="text-align: left; width: 1%; background-color: #c0c0c0; border-bottom: #000000 2pt double"><font style="font: x-small Times New Roman">)</font></td></tr></table></div> 36425000 36049000 36931000 36691000 14.57 460000 600000 329000 -165000 153000 154000 The Company has established a non-qualified deferred compensation plan for certain members of management and all non-employee directors. The Company is informally funding its obligations under the deferred compensation plan by purchasing shares in various equity, bond and money market mutual funds that are held in a "Rabbi Trust" and are restricted for payment of obligations to plan participants. The deferred compensation plan liability is included in Other Non-current Liabilities in the accompanying consolidated balance sheets. The Company purchased 850,100 shares of LoJack common stock in the open market in November and December 2015, prior to entering into a definitive agreement to acquire 100% of LoJack's common stock. These shares were considered trading securities and were recorded at fair value as of February 29, 2016. The equity investment in LoJack's French licensee, in the form of a publicly-traded common stock, is accounted for as an available-for-sale security and is valued at the quoted closing price on its market exchange. The related unrealized gains or losses are included in accumulated other comprehensive income (loss) in the stockholders' equity section of the consolidated balance sheet. 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Satellite [Member] Disclosure of the number and weighted-average grant date fair value for restricted stock, performance stock units and restricted stock units that were outstanding at the beginning and end of the year, and the number of restricted stock and restricted stock units that were granted, vested, or forfeited during the year. Schedule of supplemental non cash and financing activities during the financial period. Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Nonvested [Abstract] Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Nonvested Weighted Average Grant Date Fair Value [Abstract] Maximum number of shares available to be given as compensation. The total fair value of equity-based awards for which the grantee gained the right during the reporting period, by satisfying service and performance requirements, to receive or retain shares or units, other instruments, or cash in accordance with the terms of the arrangement. The number of options exercised during the period relating to the net share settlement transaction. The number of options retained by the company in the net settlement transaction to cover the option exercise price. Short Term Marketable Securities [Member]. Smart Driver Club Limited [Member] Supplier One [Member] Supplier Two [Member] Supply Contract [Member] UK Subsidiary [Member] Warranty Term. Wireless Datacom [Member] Represents the amount of the cost of borrowed funds accounted for as contractual coupon interest expense for debt. 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Increase (Decrease) in Prepaid Expense and Other Assets Increase (Decrease) in Accounts Payable Increase (Decrease) in Deferred Revenue Net Cash Provided by (Used in) Operating Activities Payments to Acquire Marketable Securities Payments to Acquire Property, Plant, and Equipment Payments to Acquire Businesses, Net of Cash Acquired Payments to Acquire Business Two, Net of Cash Acquired Payments to Acquire Other Investments Payments for (Proceeds from) Other Investing Activities Net Cash Provided by (Used in) Investing Activities Payments for Hedge, Financing Activities Repayments of Notes Payable Payments for Repurchase of Common Stock Payments Related to Tax Withholding for Share-based Compensation Net Cash Provided by (Used in) Financing Activities Effect of Exchange Rate on Cash and Cash Equivalents Cash and Cash Equivalents, Period Increase (Decrease) Inventory Disclosure [Text Block] Other Assets Disclosure [Text Block] Comprehensive Income (Loss) Note [Text Block] Stockholders' 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Payments, Due in Two Years Operating Leases, Future Minimum Payments, Due in Three Years Operating Leases, Future Minimum Payments, Due in Four Years Operating Leases, Future Minimum Payments, Due in Five Years Operating Leases, Future Minimum Payments, Due Thereafter Operating Leases, Future Minimum Payments Due Long Term Marketable Securities [Member] Other Contractual Commitments [Member] Restricted Stock Units RSU And Performance Shares [Member] UK Subsidiary [Member] EX-101.PRE 9 camp-20160831_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT EX-101.DEF 10 camp-20160831_def.xml XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT XML 11 R1.htm IDEA: XBRL DOCUMENT v3.5.0.2
Document and Entity Information - shares
6 Months Ended
Aug. 31, 2016
Sep. 23, 2016
Document and Entity Information [Abstract]    
Entity Registrant Name CalAmp Corp.  
Entity Central Index Key 0000730255  
Entity Filer Category Accelerated Filer  
Trading Symbol CAMP  
Current Fiscal Year End Date --02-28  
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Aug. 31, 2016  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2017  
Entity Voluntary Filers No  
Entity Current Reporting Status Yes  
Entity Common Stock, Shares Outstanding   36,332,377
XML 12 R2.htm IDEA: XBRL DOCUMENT v3.5.0.2
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Aug. 31, 2016
Feb. 29, 2016
Current assets:    
Cash and cash equivalents $ 94,705 $ 139,388
Short-term marketable securities 22,299 88,718
Accounts receivable, less allowance for doubtful accounts of $691 and $622 at August 31, 2016 and February 29, 2016, respectively 68,766 49,432
Inventories 27,999 16,731
Prepaid expenses and other current assets 7,314 4,498
Total current assets 221,083 298,767
Property, equipment and improvements, net of accumulated depreciation and amortization 21,599 11,225
Deferred income tax assets 28,604 30,213
Goodwill 63,180 16,508
Other intangible assets, net 74,916 17,010
Other assets 10,777 10,640
Total assets 420,159 384,363
Current liabilities:    
Accounts payable 36,604 24,938
Accrued payroll and employee benefits 10,800 6,814
Deferred revenue 16,855 9,438
Other current liabilities 17,945 8,375
Total current liabilities 82,204 49,565
1.625% convertible senior unsecured notes 143,260 139,800
Other non-current liabilities 13,500 5,551
Total liabilities 238,964 194,916
Commitments and contingencies
Stockholders' equity:    
Preferred stock, $.01 par value; 3,000 shares authorized; no shares issued or outstanding
Common stock, $.01 par value; 80,000 shares authorized; 36,419 and 36,667 shares issued and outstanding at August 31, 2016 and February 29, 2016, respectively 364 367
Additional paid-in capital 223,680 229,159
Accumulated deficit (41,991) (39,853)
Accumulated other comprehensive loss (858) (226)
Total stockholders' equity 181,195 189,447
Total Liabilities and Stockholders' Equity $ 420,159 $ 384,363
XML 13 R3.htm IDEA: XBRL DOCUMENT v3.5.0.2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
shares in Thousands, $ in Thousands
Aug. 31, 2016
Feb. 29, 2016
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts (in dollars) $ 691 $ 622
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized 3,000 3,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized 80,000 80,000
Common stock, shares issued 36,419 36,667
Common stock, shares outstanding 36,419 36,667
XML 14 R4.htm IDEA: XBRL DOCUMENT v3.5.0.2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Aug. 31, 2016
Aug. 31, 2015
Revenues:        
Products $ 75,984 $ 58,498 $ 152,405 $ 113,295
Application subscriptions and other services 14,495 11,310 29,221 21,942
Total revenues 90,479 69,808 181,626 135,237
Cost of revenues:        
Products 45,486 39,223 94,375 76,560
Application subscriptions and other services 7,379 5,282 14,803 9,848
Total cost of revenues 52,865 44,505 109,178 86,408
Gross profit 37,614 25,303 72,448 48,829
Operating expenses:        
Research and development 5,885 4,995 11,976 9,560
Selling 12,683 5,847 23,991 11,345
General and administrative 11,284 4,908 27,267 9,683
Intangible asset amortization 3,856 1,655 7,346 3,299
Total operating expenses 33,708 17,405 70,580 33,887
Operating income 3,906 7,898 1,868 14,942
Non-operating income (expense):        
Investment income (loss) 455 (43) 908 (15)
Interest expense (2,474) (2,280) (4,898) (2,928)
Other income (expense) (130) (18) 413 (29)
Total non-operating income (expense) (2,149) (2,341) (3,577) (2,972)
Income (loss) before income taxes and equity in net loss of affiliate 1,757 5,557 (1,709) 11,970
Income tax benefit (provision) (864) (2,058) 255 (4,412)
Income (loss) before equity in net loss of affiliate 893 3,499 (1,454) 7,558
Equity in net loss of affiliate (372) (684)
Net income (loss) $ 521 $ 3,499 $ (2,138) $ 7,558
Earnings (loss) per share:        
Basic $ 0.01 $ 0.10 $ (0.06) $ 0.21
Diluted $ 0.01 $ 0.10 $ (0.06) $ 0.21
Shares used in computing earnings (loss) per share:        
Basic 36,390 36,135 36,425 36,049
Diluted 36,849 36,716 36,425 36,691
Comprehensive income (loss):        
Net income (loss) $ 521 $ 3,499 $ (2,138) $ 7,558
Other comprehensive loss:        
Foreign currency translation adjustments (109) (624)
Unrealized loss on equity investment in French licensee, net of tax (16) (8)
Total comprehensive income (loss) $ 396 $ 3,499 $ (2,770) $ 7,558
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.5.0.2
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income (loss) $ (2,138) $ 7,558
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Depreciation expense 4,032 1,675
Intangible assets amortization expense 7,346 3,299
Stock-based compensation expense 3,605 2,609
Amortization of convertible debt issue costs and discount 3,460 2,019
Foreign currency remeasurement gains (460)
Deferred tax assets, net (1,091) 4,106
Equity in net loss of affiliate 684
Impairment of internal use software 1,364
Other 14 7
Changes in operating assets and liabilities:    
Accounts receivable 1,814 2,115
Inventories 2,043 (3,906)
Prepaid expenses and other assets 2,818 257
Accounts payable 1,929 9,487
Accrued liabilities (6,864) 1,185
Deferred revenue 760 (1,649)
NET CASH PROVIDED BY OPERATING ACTIVITIES 19,316 28,762
CASH FLOWS FROM INVESTING ACTIVITIES:    
Proceeds from maturities of marketable securities 66,419 6,634
Purchases of marketable securities (114,010)
Capital expenditures (3,527) (2,576)
Acquisition of Crashboxx (1,500)
Acquisition of LoJack, net of cash acquired (116,982)
Advances to affiliate (737)
Other (36)
NET CASH USED IN INVESTING ACTIVITIES (54,863) (111,452)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from issuance of convertible senior notes 172,500
Payment of debt issuance costs (5,291)
Purchase of convertible note hedges (31,343)
Proceeds from issuance of warrants 15,991
Payment of acquisition-related note and contingent consideration (1,262)
Repurchases of common stock (8,451)
Taxes paid related to net share settlement of vested equity awards (1,416) (2,478)
Proceeds from exercise of stock options 780 487
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (9,087) 148,604
EFFECT OF EXCHANGE RATE CHANGES ON CASH (49)
Net change in cash and cash equivalents (44,683) 65,914
Cash and cash equivalents at beginning of period 139,388 34,184
Cash and cash equivalents at end of period $ 94,705 $ 100,098
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.5.0.2
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
6 Months Ended
Aug. 31, 2016
Accounting Policies [Abstract]  
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

CalAmp Corp. (“CalAmp” or the “Company”) is a leading provider of wireless communications solutions for a broad array of applications to customers globally. The Company’s business activities are organized into its Wireless DataCom and Satellite business segments.

In March 2016, the Company completed the acquisition of all outstanding shares of common stock of LoJack Corporation (“LoJack”), a global leader in products and services for tracking and recovering cars, trucks and other valuable mobile assets. See Note 2 for a description of this acquisition.

Up to and including the quarter ended August 31, 2016, products of the Company's Satellite segment were sold to EchoStar, an affiliate of Dish Network, for incorporation into complete subscription satellite television systems. In April 2016, EchoStar notified the Company that it would stop purchasing products from the Company at the end of its then-current product demand forecast as a result of a consolidation of its supplier base. EchoStar’s product demand forecast with the Company extended through August 2016, and the products covered by this forecast were substantially all shipped prior to August 31, 2016. In light of the fact that EchoStar accounted for essentially all of the revenues of the Satellite segment, the Company’s Satellite business was shut down effective August 31, 2016.

Certain notes and other information included in the Company’s Annual Report on Form 10-K are condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the Company’s 2016 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on April 20, 2016.

In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the Company’s financial position at August 31, 2016 and its results of operations for the three and six months ended August 31, 2016 and 2015. The results of operations for such periods are not necessarily indicative of results to be expected for the full fiscal year.

All significant intercompany transactions and accounts have been eliminated in consolidation.

Revenue Recognition

The Company recognizes revenue from product sales when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection of the sales price is reasonably assured. Generally, for product sales that are not bundled with an application service these criteria are met at the time product is shipped, except for shipments made on the basis of “FOB Destination” terms, in which case title transfers to the customer and the revenue is recorded by the Company when the shipment reaches the customer. Customers generally do not have a right of return except for defective products returned during the warranty period. The Company records estimated commitments related to customer incentive programs as reductions of revenues.

In addition to product sales, the Company provides Software as a Service (SaaS) subscriptions for its fleet management and vehicle telematics applications through which customers are provided with the ability to wirelessly communicate with monitoring devices installed in vehicles and other mobile or remote assets via software applications hosted by the Company. Generally, the Company defers the recognition of revenue for the products that are sold with application subscriptions because the products are not functional without the application services. In such circumstances, the associated product costs are recorded as deferred costs in the balance sheet. The deferred product revenue and deferred product cost amounts are amortized to application subscriptions revenue and cost of revenue on a straight-line basis over minimum contractual subscription periods of one to five years. Revenues from renewals of data communication services after the initial contract term are recognized as application subscriptions revenue when the services are provided. When customers prepay application subscription renewals, such amounts are recorded as deferred revenues and are recognized ratably over the renewal term.

In the United States, the Company generally recognizes revenue on LoJack product sales that have no associated continuing service obligations on the part of the Company upon installation of the products. Revenue relating to sales made to the Company’s third party installation partners, who purchase the Company’s products and perform installations themselves, is recognized upon shipment, which is prior to the installation of the related products in the end user’s vehicle. Revenue from the sales of products to international licensees is recognized upon shipment of the products to the licensee or when payment becomes reasonably assured, whichever is later.

In Italy, the purchase of an initial monitoring service contract is a requirement at the time the consumer purchases a LoJack product. Revenue is recognized over the life of the contract. These contracts, which are sold separately from the LoJack hardware, are offered for terms ranging from 12 to 60 months and are generally payable in full upon activation of the related unit or renewal of a previous contract. Customers are also offered a month-to-month option for service contracts.

The Company offers several types of extended warranty contracts in the United States. For those contracts for which an independent third party insurer, and not the Company, is the primary obligor, the Company recognizes revenue at the time of the sale of the warranty. For those warranty products to which the Company is the primary obligor, revenue is deferred and is recognized over five years, which is the estimated life of new vehicle ownership. For the majority of extended warranty contracts originated after 2011, the Company recognizes revenue at the time of sale.

For those warranties for which an independent third party insurer, and not the Company, is the primary obligor, the Company records revenue on a gross basis, with related costs being included in cost of goods sold. The Company considered the factors for gross and net revenue recording and determined that despite not being the primary obligor for the majority of these arrangements, gross revenue reporting was appropriate based on the relevant accounting guidance. Specifically, the Company has latitude in establishing price; it can change the product offering; it has discretion in supplier selection; it is involved in the determination of product or service specifications; it bears the credit risk; and the amount that it earns on each contract is not fixed.

Cash and Cash Equivalents

The Company considers all highly liquid investments with remaining maturities at date of purchase of three months or less to be cash equivalents.

Fair Value Measurements

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly manner in an arms-length transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has elected the fair value option for its investment in marketable securities on a contract-by-contract basis at the time each contract is initially recognized in the financial statements or upon an event that gives rise to a new basis of accounting for the items.

Foreign Currency Translation and Accumulated Other Comprehensive Loss Account

A cumulative foreign currency translation loss of $850,000 related to the Company’s foreign subsidiaries is included in accumulated other comprehensive income (loss) in the stockholders’ equity section of the consolidated balance sheet at August 31, 2016. The aggregate foreign currency transaction exchange rate gains (losses) included in determining income (loss) before income taxes and equity in net loss of affiliate were $405,000 and $(29,000) in the six months ended August 31, 2016 and 2015, respectively.

Recently Issued Accounting Standards

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-09, Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). This update is intended to simplify the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those fiscal years. The Company is currently evaluating the impact of adoption of the new standard on its consolidated financial statements.

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Early adoption is permitted. The Company is currently evaluating the impact of adoption of the new standard on its consolidated financial statements.

In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). This standard revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments. Under the new guidance, entities will have to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. ASU 2016-01 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of this revenue standard for periods beginning after December 15, 2016 to December 15, 2017, with early adoption permitted but not earlier than the original effective date. ASU 2014-09 must be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is continuing to evaluate the effect and methodology of adopting this accounting standard on its results of operations, cash flows and financial position.

In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). This update amends the definition of a discontinued operation, and requires additional disclosures about discontinued operations, as well as disposal transactions that do not meet the discontinued operations criteria. Under this new guidance, only disposals of a component representing a strategic shift in operations that has or will have a major impact on the Company’s operations or financial results should be classified as discontinued operations. The effective date of this standard was March 1, 2015. See Note 15 which describes the effect of the adoption of this standard.

XML 17 R7.htm IDEA: XBRL DOCUMENT v3.5.0.2
LOJACK ACQUISITION
6 Months Ended
Aug. 31, 2016
Business Combinations [Abstract]  
LOJACK ACQUISITION

NOTE 2 – LOJACK ACQUISITION

In March 2016, the Company completed the acquisition of all outstanding shares of common stock of LoJack. As a result of the acquisition, LoJack became a wholly-owned subsidiary of CalAmp and is consolidated with the Company’s financial statements as of March 15, 2016 as a component of the Company’s Wireless DataCom business segment. The Company funded the acquisition from cash on hand. The total purchase price was $131.7 million, which included the $5.5 million fair value of the 850,100 shares of LoJack common stock that CalAmp purchased in the open market in November and December 2015, prior to entering into a definitive acquisition agreement with LoJack.

Pursuant to the Company's business combinations accounting policy, the Company estimated the preliminary fair values of net tangible and intangible assets acquired, and the excess of the consideration transferred over the aggregate of such fair values was recorded as goodwill. The preliminary fair values of net tangible assets and intangible assets acquired were based upon preliminary valuations. The Company's estimates and assumptions reflected in such preliminary valuations are subject to change within the measurement period, which is up to one year from the acquisition date. The primary areas that remain preliminary relate to the fair values of intangible assets acquired, certain tangible assets and liabilities acquired, certain legal matters, deferred income taxes and goodwill. The Company expects to continue to obtain information to assist in determining the fair values of the net assets acquired during the measurement period. The following is the preliminary purchase price allocation for LoJack (in thousands):

Purchase price             $        131,735
Less cash acquired, net of debt assumed (9,303 )
       Net cash paid 122,432
Fair value of net assets acquired:
       Current assets other than cash $        41,532
       Property and equipment 12,259
       Developed technology 8,200
       Tradename 35,500
       Customer lists 4,650
       Dealer relationships 16,850
       Other non-current assets 4,208
       Deferred tax liability (2,700 )
       Current liabilities (33,457 )
       Deferred revenue, non-current (8,698 )
       Other non-current liabilities (2,584 )
              Total fair value of net assets acquired 75,760
Goodwill $ 46,672

The Company paid a premium (i.e., goodwill) over the fair value of the net tangible and identified intangible assets acquired. The Company believes the acquisition aligns with its strategy to deliver innovative, next generation connected vehicle telematics technologies, thereby accelerating the Company’s strategic roadmap in this large and fast growing market. Furthermore, the Company believes that combining CalAmp's leading portfolio of wireless connectivity devices, software, services and applications with LoJack’s world-renowned brand, proprietary stolen vehicle recovery product, unique law enforcement network and strong relationships with auto dealers, heavy equipment providers and global licensees will create a market leader that is well-positioned to drive the broad adoption of connected vehicle telematics technologies and applications worldwide. The combined enterprise offers customers access to integrated, turnkey offerings that enable a multitude of high value applications encompassing vehicle security and enhanced driver safety. Furthermore, the combination of CalAmp’s and LoJack’s technology offerings is expected to provide global customers with connected vehicle applications to help ensure that retail auto dealers remain competitive and relevant in today’s rapidly evolving markets.

The goodwill arising from the LoJack acquisition is not deductible for income tax purposes.

In connection with the acquisition of LoJack, the Company has assumed liabilities related to quality assurance programs, warranty claims and contract obligations which are included in accrued expenses and other current liabilities in the purchase price allocation described above. The fair value of inventories acquired included a purchase accounting fair market value step-up of $4.6 million. In the six months ended August 31, 2016, the Company recognized $4.3 million of this markup as a component of cost of revenues that reflects the extent to which the inventory that was subject to step-up was sold to the Company’s customers in such period. Included in inventory as of August 31, 2016 was $0.3 million relating to the remaining fair value step-up associated with the LoJack acquisition.

During the quarter ended August 31, 2016, the Company received an independent appraisal of LoJack’s property and equipment, which resulted in a purchase accounting fair market value step-up of $2.6 million. In the three months ended August 31, 2016, the Company recognized $0.4 million of this markup as a component of cost of revenues and operating expenses that reflects the extent to which the property, equipment and improvements that were subject to the step-up were depreciated.

Acquisition and integration-related costs of $3.5 million were included in selling, general, and administrative expenses in the Company's statements of comprehensive income (loss) for the three and six months ended August 31, 2016.

Revenues of LoJack included in the consolidated statements of operations for the three and six months ended August 31, 2016 were $31.9 million and $59.8 million, respectively. Post-acquisition earnings of LoJack on a standalone basis are impracticable to determine, because immediately following the acquisition CalAmp began to integrate LoJack into its existing operations.

The following is unaudited pro forma consolidated financial information for the Company presented as if the acquisition of LoJack had occurred on March 1, 2015, the beginning of the Company’s prior fiscal year.

(in thousands except per share amounts)

      Pro Forma
Six Months Ended
August 31,
2016       2015
Revenues $      186,881 $      200,539
Net income $ 5,447 $ 2,120
 
Earnings per share:
       Basic $ 0.15 $ 0.06
       Diluted $ 0.15 $ 0.06
 
Shares used in computing earnings per share:
       Basic 36,425 36,049
       Diluted 36,931 36,691

The following adjustments were included in the unaudited pro forma financial information (in thousands):

Pro Forma
Six Months Ended
August 31,
      2016       2015
LoJack standalone net income:
       From March 1 to March 14, 2016 $       973 $       -
       For the six month period ended September 30, 2015 - 2,669
Increase (decrease) in revenue for fair valuation of
       deferred revenue 984 (984 )
(Increase) decrease in costs and expenses:  
       Amortization of inventory step-up 4,318 (4,318 )
       Amortization of intangible assets and depreciation of
              property, equipment and improvements acquired         (309 ) (3,700 )
       Acquisition and integration expenses 3,539 (3,195 )
       Net increase (decrease) in pretax income (loss) 9,505 (9,528 )
Income tax effects (1,920 ) 4,090
Change in net income (loss) 7,585 (5,438 )
Net income (loss) as reported (2,138 ) 7,558
Pro forma net income loss $ 5,447 $ 2,120

The pro forma consolidated financial information is not necessarily indicative of what the Company's actual results of operations would have been had LoJack been included in the Company's historical consolidated financial statements for all of the six month periods ended August 31, 2016 and 2015. In addition, the pro forma consolidated financial information does not attempt to project the future results of operations of the combined company.

XML 18 R8.htm IDEA: XBRL DOCUMENT v3.5.0.2
CASH, CASH EQUIVALENTS AND INVESTMENTS
6 Months Ended
Aug. 31, 2016
Cash and Cash Equivalents [Abstract]  
CASH, CASH EQUIVALENTS AND INVESTMENTS

NOTE 3 – CASH, CASH EQUIVALENTS AND INVESTMENTS

The following tables summarize the Company’s financial instrument assets as of August 31, 2016 and February 29, 2016 using the hierarchy described in Note 1 under the heading “Fair Value Measurements” (in thousands):

As of August 31, 2016
Balance Sheet Classification
of Fair Value
Unrealized Cash and Short-Term
Adjusted Gains Fair Cash Marketable Other
Cost (Losses) Value Equivalents Securities Assets
Cash       $      31,665       $             -       $      31,665       $           31,665       $           -       $       -
 
Level 1:
       Commercial paper 40 - 40 40 - -
       Mutual funds (1) 5,171 67 5,238 - - 5,238
       Equity investment in
              French licensee (2) 296 (10 ) 286 - - 286
 
Level 2:
       Repurchase agreements 63,000 - 63,000 63,000 - -
       Corporate bonds 22,302 (3 ) 22,299 - 22,299 -
 
Total $ 122,474 $ 54 $ 122,528 $ 94,705 $ 22,299 $ 5,524

As of February 29, 2016
Balance Sheet Classification
  of Fair Value
Unrealized Cash and Short-Term
Adjusted Gains Fair Cash Marketable Other
      Cost       (Losses)       Value       Equivalents       Securities       Assets
Cash $      6,890 $        - $      6,890 $      6,890 $      - $      -
 
Level 1:
       Mutual funds (1) 3,753 (383 ) 3,370 - - 3,370
       LoJack common stock (3) 4,050 1,416 5,466 - - 5,466
 
Level 2:
       Repurchase agreements 130,900 - 130,900 130,900 - -
       Corporate bonds 82,300 (16 ) 82,284 1,556 80,728
       Commercial paper 8,032 - 8,032 42 7,990 -
 
Total $ 235,925 $ 1,017 $ 236,942 $ 139,388 $ 88,718 $ 8,836

       (1)        The Company has established a non-qualified deferred compensation plan for certain members of management and all non-employee directors. The Company is informally funding its obligations under the deferred compensation plan by purchasing shares in various equity, bond and money market mutual funds that are held in a “Rabbi Trust” and are restricted for payment of obligations to plan participants. The deferred compensation plan liability is included in Other Non-current Liabilities in the accompanying consolidated balance sheets.
 
(2) The equity investment in LoJack’s French licensee, in the form of a publicly-traded common stock, is accounted for as an available-for-sale security and is valued at the quoted closing price on its market exchange. The related unrealized gains or losses are included in accumulated other comprehensive income (loss) in the stockholders’ equity section of the consolidated balance sheet.
 
(3) The Company purchased 850,100 shares of LoJack common stock in the open market in November and December 2015, prior to entering into a definitive agreement to acquire 100% of LoJack’s common stock. These shares were considered trading securities and were recorded at fair value as of February 29, 2016.
XML 19 R9.htm IDEA: XBRL DOCUMENT v3.5.0.2
INVENTORIES
6 Months Ended
Aug. 31, 2016
Inventory Disclosure [Abstract]  
INVENTORIES

NOTE 4 - INVENTORIES

Inventories consist of the following (in thousands):

August 31,       February 29,
2016   2016
Raw materials $     16,202 $     14,145
Work in process   432 180
Finished goods 11,365 2,406
$ 27,999 $ 16,731
XML 20 R10.htm IDEA: XBRL DOCUMENT v3.5.0.2
GOODWILL AND OTHER INTANGIBLE ASSETS
6 Months Ended
Aug. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 5 – GOODWILL AND OTHER INTANGIBLE ASSETS

All goodwill shown in the accompanying consolidated balance sheets is associated with the Company’s Wireless DataCom segment. Changes in goodwill are as follows (in thousands):

Six Months Ended
  August 31,
2016       2015
Balance at beginning of period $      16,508 $      15,483
Acquisition of LoJack 46,672 -
Acquisition of Crashboxx   - 1,025
Balance at end of period $ 63,180 $ 16,508

Other intangible assets are comprised as follows (in thousands):

Gross Accumulated Amortization Net
  Amort-
ization Feb. 29, Addi- Aug. 31, Feb. 29, Aug. 31, Aug. 31, Feb. 29,
   Period    2016    tions    2016    2016    Expense    2016    2016    2016
Supply contract 5 years $    2,220 $     - $    2,220 $    1,679 $    216 $    1,895 $    325 $    541
Developed technology 2-7 years 14,080 8,200 22,280 6,427 1,913 8,340 13,940 7,653
Tradenames 7-10 years 2,143 35,500 37,643 1,522 1,778 3,300 34,343 621
Customer lists 4-7 years 18,300 4,650 22,950 10,358 2,305 12,663 10,287 7,942
Dealer relationships 7 years - 16,850 16,850 - 1,104 1,104 15,746 -
Covenants not to compete 5 years 170 170 128 18 146 24 42
Patents 5 years 273 52 325 62 12 74 251 211
$ 37,186 $ 65,252 $ 102,438 $ 20,176 $ 7,346 $ 27,522 $ 74,916 $ 17,010

Estimated future amortization expense is as follows (in thousands):

Fiscal Year  
2017 (remainder) $     7,730
2018   15,005
2019 11,660
2020 9,652
2021 7,830
Thereafter 23,039
$ 74,916
XML 21 R11.htm IDEA: XBRL DOCUMENT v3.5.0.2
OTHER ASSETS
6 Months Ended
Aug. 31, 2016
Other Assets, Noncurrent Disclosure [Abstract]  
OTHER ASSETS

NOTE 6 – OTHER ASSETS

Other assets consist of the following (in thousands):

August 31, February 29,
2016       2016
Deferred compensation plan assets $     5,238 $     3,370
Investment in international licensees 2,327 -
Equity investment in and loans to UK affiliate 1,124 1,167
Other 2,088 637
Investment in LoJack common stock - 5,466
$ 10,777 $ 10,640

Included in the assets of the LoJack acquisition are investments in international licensees at the preliminary valuation of $2,327,000 consisting of a 12.5% equity interest in LoJack’s Mexican licensee of $1,541,000, a 17.5% equity interest in LoJack’s Benelux licensee of $500,000, and a 5.5% interest in LoJack’s French licensee of $286,000. The Company has not yet obtained all information required to complete the valuation of the Mexican and Benelux investments. The investment in LoJack’s French licensee, in the form of a marketable equity security, is accounted for as an available-for-sale security and is valued at the quoted closing price of its market exchange as of the reporting date.

The equity investment and loans to the Company’s UK affiliate of $1,124,000 include a 49% equity interest in and loans to Smart Driver Club Limited. The investment is accounted for under the equity method since the Company has significant influence over the investee. The Company’s equity in the net loss of this affiliate amounted to $684,000 for the six months ended August 31, 2016. In May 2016, the Company made a loan of $737,000 denominated in British pounds to Smart Driver Club Limited bearing interest at an annual interest rate of 8%, with principal and all unpaid interest due May 19, 2020.

LoJack became a wholly-owned subsidiary of the Company in March 2016, at which time the investment of $5.5 million as of February 29, 2016 became part of the purchase price of the LoJack acquisition, as described in Note 2.

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FINANCING ARRANGEMENTS
6 Months Ended
Aug. 31, 2016
FINANCING ARRANGEMENTS AND CONTRACTUAL CASH OBLIGATIONS [Abstract]  
FINANCING ARRANGEMENTS AND CONTRACTUAL CASH OBLIGATIONS

NOTE 7 - FINANCING ARRANGEMENTS

Bank Credit Facility

The Company has a credit facility with Square 1 Bank that provides for borrowings up to $15 million or 85% of eligible accounts receivable, whichever is less. The credit facility expires on March 1, 2017. Borrowings under this line of credit bear interest at the bank’s prime rate. There were no borrowings outstanding under this credit facility at August 31, 2016 or February 29, 2016.

The bank credit facility contains financial covenants that require the Company to maintain a minimum level of earnings before interest, income taxes, depreciation, amortization and other noncash charges (EBITDA) and a minimum debt coverage ratio, both measured monthly on a rolling 12-month basis. At August 31, 2016, the Company was in compliance with its debt covenants under the credit facility.

1.625% Convertible Senior Unsecured Notes

As of August 31, 2016, the Company had $172.5 million aggregate principal amount of convertible senior unsecured notes (the “Notes”) outstanding. The Notes are senior unsecured obligations of the Company and bear interest at a rate of 1.625% per year payable in cash on May 15 and November 15 of each year beginning on November 15, 2015. The Notes will mature on May 15, 2020 unless earlier converted or repurchased in accordance with their terms. The Company may not redeem the Notes prior to their stated maturity date. The Notes will be convertible into cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election, based on an initial conversion rate of 36.2398 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of $27.594 per share of common stock, subject to customary adjustments. Holders may convert their Notes at their option at any time prior to November 15, 2019 upon the occurrence of certain events in the future, as defined in the indenture agreement dated May 6, 2015 (the “Indenture”). During the period from November 15, 2019 to May 13, 2020, holders may convert all or any portion of their Notes regardless of the foregoing conditions. The Company’s intent is to settle the principal amount of the Notes in cash upon conversion. If the conversion value exceeds the Note principal amount, the Company would deliver shares of its common stock in respect to the remainder of its conversion obligation in excess of the aggregate principal amount (the “conversion spread”). The shares associated with the conversion spread, if any, would be included in the denominator for the computation of diluted earnings per share, with such shares calculated using the average closing price of the Company’s common stock during each period. As of August 31, 2016, none of the conditions allowing holders of the Notes to convert have been met.

If the Company undergoes a fundamental change (as defined in the Indenture), holders of the Notes may require the Company to repurchase their Notes at a repurchase price of 100% of the principal amount of the Notes, plus any accrued and unpaid interest, if any, to but not including the fundamental change repurchase date.

In addition, following certain corporate events that occur prior to maturity, the Company will increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event in certain circumstances. In such event, an aggregate of up to 2.5 million additional shares of common stock could be issued upon conversions in connection with such corporate events, subject to adjustment in the same manner as the conversion rate.

Balances attributable to the Notes consist of the following (in thousands):

August 31, February 29,
2016       2016
Principal $      172,500 $        172,500
Less: Unamortized debt discount   (25,933 ) (29,002 )
          Unamortized debt issuance costs (3,307 ) (3,698 )
Net carrying amount of the Notes $ 143,260 $ 139,800

The Notes are carried at their principal amount, net of unamortized debt discount and issuance costs, and are not carried at fair value at each period end. The issuance date fair value of the liability component of the Notes in the amount of $138.9 million was determined using a discounted cash flow analysis, in which the projected interest and principal payments were discounted back to the issuance date of the Notes at a market interest rate for nonconvertible debt of 6.2%, which represents a Level 3 fair value measurement. The debt discount of $33.6 million is being amortized to interest expense using the effective interest method with an effective interest rate of 6.2% over the period from the issuance date through the contractual maturity date of the Notes of May 15, 2020. The approximate fair value of the Notes as of August 31, 2016 was $161 million, which was estimated on the basis of inputs that are observable in the market and which is considered a Level 2 measurement method in the fair value hierarchy.

See Note 14 for information related to interest expense on the Notes.

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INCOME TAXES
6 Months Ended
Aug. 31, 2016
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 8 - INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and for income tax purposes. The Company evaluates the realizability of its deferred income tax assets and a valuation allowance is provided, as necessary. In assessing this valuation allowance, the Company reviews historical and future expected operating results and other factors, including its recent cumulative earnings experience, expectations of future taxable income by taxing jurisdiction and the carryforward periods available for tax reporting purposes, to determine whether it is more likely than not that deferred tax assets are realizable.

The Company files income tax returns in the U.S. federal jurisdiction, various U.S. states and Puerto Rico, Canada, United Kingdom, Ireland, Italy, Netherlands, Brazil, Mexico, Uruguay and New Zealand. Income tax returns filed for fiscal year 2011 and earlier are not subject to examination by U.S. federal and state tax authorities. Certain income tax returns for fiscal years 2012 through 2016 remain open to examination by U.S. federal and state tax authorities. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods in which net operating losses or tax credits were generated and carried forward, and to make adjustments up to the net operating loss or tax credit carryforward amount. Income tax returns for fiscal years 2012 through 2016 remain open to examination by tax authorities in Canada, United Kingdom, Ireland, Italy, Netherlands, Brazil, Mexico, Uruguay, New Zealand, and Puerto Rico.

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.5.0.2
EARNINGS PER SHARE
6 Months Ended
Aug. 31, 2016
Earnings Per Share [Abstract]  
EARNINGS PER SHARE

NOTE 9 - EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period, plus the dilutive effect of outstanding stock options and restricted stock-based awards using the treasury stock method. The following table sets forth the composition of weighted average shares used in the computation of basic and diluted earnings per share (in thousands):

Three Months Ended Six Months Ended
August 31, August 31,
      2016       2015       2016       2015
Basic weighted average number of common
       shares outstanding 36,390 36,135 36,425 36,049
Effect of stock options and restricted stock units
       computed on treasury stock method 459 581 - 642
Diluted weighted average number of common
       shares outstanding      36,849      36,716      36,425      36,691

All outstanding options and restricted stock units at August 31, 2016 were excluded from the computation of diluted earnings per share for the six month period then ended because the Company reported a net loss and the effect of inclusion would be antidilutive. Shares subject to anti-dilutive stock options and restricted stock-based awards of 450,000 at August 31, 2016 were excluded from the calculations of diluted earnings per share for the three months then ended. Shares subject to anti-dilutive stock options and restricted stock-based awards of 238,000 at August 31, 2015 were excluded from the calculations of diluted earnings per share for the three and six month periods then ended.

The Company has the option to pay cash, issue shares of common stock or any combination thereof for the aggregate amount due upon conversion of the Notes. The Company’s intent is to settle the principal amount of the Notes in cash upon conversion. As a result, only the shares issuable for the conversion value, if any, in excess of the principal amounts of the Notes would be included in diluted earnings per share. From the time of the issuance of Notes, the average market price of the Company’s common stock has been less than the $27.594 initial conversion price of the Notes, and consequently no shares have been included in diluted earnings per share for the conversion value of the Notes.

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.5.0.2
COMPREHENSIVE INCOME
6 Months Ended
Aug. 31, 2016
Comprehensive Income  
COMPREHENSIVE INCOME

NOTE 10 – COMPREHENSIVE INCOME

Comprehensive income consists of two components, net income (loss) and other comprehensive income (loss) (“OCI”). OCI refers to revenue, expenses and gains and losses that under U.S. Generally Accepted Accounting Principles (GAAP) are recorded as an element of stockholders’ equity but are excluded from net income (loss). The Company’s OCI consists of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency and unrealized gains and losses on marketable securities classified as available-for-sale.

The following table shows the changes in Accumulated Other Comprehensive Loss by component for the six months ended August 31, 2016 (in thousands):

Cumulative Unrealized
Foreign Gains/Losses
on Marketable
  Currency
      Translation       Securities       Total
Balances at February 29, 2016 $            (226 ) $                     - $             (226 )
Other comprehensive loss, net of tax (624 ) (8 ) (632 )
Balances at August 31, 2016 $ (850 ) $ (8 ) $ (858 )
XML 26 R16.htm IDEA: XBRL DOCUMENT v3.5.0.2
STOCKHOLDERS' EQUITY
6 Months Ended
Aug. 31, 2016
Equity [Abstract]  
STOCKHOLDERS' EQUITY

NOTE 11 – STOCKHOLDERS’ EQUITY

Stock Repurchase

In June 2016, the Company’s Board of Directors authorized a share repurchase program, under which the Company may repurchase up to $25 million of its outstanding common stock. Under the stock repurchase program, the Company may repurchase shares in open market purchases in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The extent to which CalAmp repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by CalAmp’s management team. The repurchase program may be suspended or discontinued at any time. The Company expects to finance the purchases with existing cash balances.

During the three and six months ended August 31, 2016, the Company repurchased 0.6 million shares of its common stock at an average share cost of $14.57, including commissions. The total cost of the share repurchases during the three and six months ended August 31, 2016 was $8.5 million. All of the share repurchases were paid for as of August 31, 2016. All common stock repurchased was retired as of August 31, 2016. Of the $25 million authorized for share repurchases, $16.5 million is remaining as of August 31, 2016.

Equity Awards

Stock-based compensation expense is included in the following captions of the unaudited consolidated statements of comprehensive income (loss) (in thousands):

Three Months Ended Six Months Ended
August 31,       August 31,
2016       2015 2016       2015
Cost of revenues $      68 $      54 $      132 $      119
Research and development   356 198     537 362
Selling 403 295 698 495
General and administrative 794 842 2,238 1,633
$ 1,621 $ 1,389 $ 3,605 $ 2,609

Changes in the Company’s outstanding stock options during the six months ended August 31, 2016 were as follows (options in thousands):

Weighted
Number of Average
  Options       Exercise Price
Outstanding at February 29, 2016 860 $              6.96
             
Granted 227 14.49
Exercised (73 ) 10.66
Forfeited or expired (4 ) (15.43 )
Outstanding at August 31, 2016                1,010 $ 8.35
             
Exercisable at August 31, 2016 679 $ 4.95

Changes in the Company’s outstanding restricted stock shares, performance stock units (“PSUs”) and restricted stock units (“RSUs”) during the six months ended August 31, 2016 were as follows (shares, PSUs and RSUs in thousands):

Number of
Restricted Weighted
Shares,       Average Grant
  PSUs and Date Fair
RSUs Value
Outstanding at February 29, 2016 953 $             16.66
           
Granted 726 14.57
Vested (317 ) 14.65
Forfeited (68 ) 15.73
Outstanding at August 31, 2016                 1,294 $ 16.03

During the six months ended August 31, 2016, the Company retained 97,267 shares of vested restricted stock and RSUs to satisfy the minimum required statutory amount of employee withholding taxes.

As of August 31, 2016, there was $21.0 million of total unrecognized stock-based compensation cost related to outstanding nonvested equity awards that is expected to be recognized as expense over a weighted-average remaining vesting period of 3.1 years.

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.5.0.2
CONCENTRATION OF RISK
6 Months Ended
Aug. 31, 2016
Risks and Uncertainties [Abstract]  
CONCENTRATION OF RISK

NOTE 12 - CONCENTRATION OF RISK

One Wireless DataCom customer in the heavy equipment industry accounted for 9% and 15% of consolidated accounts receivable at August 31, 2016 and February 29, 2016, respectively. The sole customer of the Company’s Satellite segment accounted for 6% and 10% of consolidated accounts receivable at August 31, 2016 and February 29, 2016.

The Company has contract manufacturing arrangements with sole source suppliers for LoJack tracking units and transmission towers. As of August 31, 2016, these suppliers accounted for less than 10% of the Company’s total accounts payable. Some of the Company’s other components, assemblies and electronic manufacturing services are also purchased from sole source suppliers. In addition, a substantial portion of the Company’s inventory is purchased from one supplier that functions as an independent foreign procurement agent and contract manufacturer. This supplier accounted for 41% and 56% of the Company’s total inventory purchases in the six months ended August 31, 2016 and 2015, respectively. As of August 31, 2016, this supplier accounted for 42% of the Company’s total accounts payable. Another supplier accounted for 11% and 16% of the Company’s total inventory purchases in the six months ended August 31, 2016 and 2015, respectively, and 17% of the Company’s total accounts payable as of August 31, 2016.

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.5.0.2
PRODUCT WARRANTIES
6 Months Ended
Aug. 31, 2016
Product Warranties Disclosures [Abstract]  
PRODUCT WARRANTIES

NOTE 13 - PRODUCT WARRANTIES

The Company generally warrants its products against defects over periods ranging from 12 to 24 months. An accrual for estimated future costs relating to products returned under warranty is recorded as an expense when products are shipped. At the end of each fiscal quarter, the Company adjusts its liability for warranty claims based on its actual warranty claims experience as a percentage of revenues for the preceding one to two years and also considers the impact of the known operational issues that may have a greater impact than historical trends. The warranty reserve is included in Other Current Liabilities in the unaudited consolidated balance sheets. Activity in the accrued warranty costs liability for the six months ended August 31, 2016 and 2015 is as follows (in thousands):

Six Months Ended
  August 31,
2016       2015
Balance at beginning of period $      1,892 $      1,819
Assumed from acquisition of LoJack 1,883 $ -
Charged to costs and expenses 530 511
Deductions (1,075 ) (531 )
Balance at end of period $ 3,230 $ 1,799

In September 2014, LoJack commenced a quality assurance program in the U.S. related to a battery performance issue in self-powered LoJack units under base or extended warranty. LoJack also entered into agreements to support quality assurance programs with all major international licensees that identified performance issues in certain self-powered units equipped with the battery pack. At August 31, 2016, the Company had a reserve of $1.1 million, which is included in the accrued warranty costs liability, for certain costs associated with this program, quality assurance programs in other countries and markets, and other business concessions related to the battery performance matter as further described in Note 16. CalAmp anticipates that the U.S. quality assurance program will be completed by the end of fiscal 2018.

XML 29 R19.htm IDEA: XBRL DOCUMENT v3.5.0.2
OTHER FINANCIAL INFORMATION
6 Months Ended
Aug. 31, 2016
OTHER FINANCIAL INFORMATION [Abstract]  
OTHER FINANCIAL INFORMATION

NOTE 14 – OTHER FINANCIAL INFORMATION

Supplemental Balance Sheet Information

Other non-current liabilities consist of the following (in thousands):

August 31,       February 29,
2016 2016
Deferred compensation plan liability $      5,265 $      3,392
Deferred revenue 6,087 1,070
Deferred rent 458 559
Acquisition-related contingent consideration 583 530
Other 1,107 -
$ 13,500 $ 5,551

The acquisition-related contingent consideration is comprised of the estimated earn-out payable to the sellers in conjunction with the Company’s April 2015 acquisition of Crashboxx.

Supplemental Statements of Comprehensive Income (Loss) Information

Investment income consists of the following (in thousands):

Three Months Ended Six Months Ended
August 31, August 31,
  2016       2015       2016       2015
Investment income on cash equivalents and marketable securities $        153 $        154   $        329 $        150
Investment income (loss) on deferred compensation plan Rabbi Trust assets        188     (197 ) 465 (165 )
Dividend income 114 - 114 -
Total investment income (loss) $ 455 $ (43 ) $ 908 $ (15 )

Interest expense consists of the following (in thousands):

Three Months Ended Six Months Ended
August 31, August 31,
        2016       2015       2016       2015
Interest expense on convertible senior unsecured notes:  
       Stated interest at 1.625% per annum $      701 $      701 $      1,402 $       882
       Amortization of note discount 1,562 1,353 3,069 1,736
       Amortization of debt issue costs 199 173 391 221
  2,462 2,227 4,862 2,839
Other interest expense 12 53 36 89
Total interest expense $ 2,474 $ 2,280 $ 4,898 $ 2,928

Supplemental Cash Flow Information

“Net cash provided by operating activities” includes cash payments for interest and income taxes as follows (in thousands):

Six Months Ended
  August 31,
2016       2015
Interest expense paid $       1,447 $       38
Income tax paid $ 979 $ 337

Following is the supplemental schedule of non-cash investing and financing activities (in thousands):

  Six Months Ended
August 31,
2016       2015
Acquisition of Crashboxx in April 2015:
       Accrued liability for earn-out consideration $      - $      455

XML 30 R20.htm IDEA: XBRL DOCUMENT v3.5.0.2
SEGMENT INFORMATION
6 Months Ended
Aug. 31, 2016
Segment Reporting [Abstract]  
SEGMENT INFORMATION

NOTE 15 - SEGMENT INFORMATION

Segment information for the three and six months ended August 31, 2016 and 2015 is as follows (dollars in thousands):

  Three Months Ended August 31, 2016 Three Months Ended August 31, 2015
Operating Segments Operating Segments
   Wireless       Corporate    Wireless    Corporate
DataCom Satellite Expenses    Total DataCom   Satellite    Expenses    Total
Revenues $     83,807 $ 6,672   $ 90,479 $ 61,819 $ 7,989   $   69,808
Gross profit $ 36,209 $ 1,405   $ 37,614 $ 23,098 $ 2,205 $ 25,303
Gross margin 43.2 % 21.1 % 41.6 % 37.4 % 27.6 %   36.2 %
Operating income $   5,035 $   139 $      (1,268 ) $   3,906 $   7,529 $   1,557 $      (1,188 ) $ 7,898
                                                                 
  Six Months Ended August 31, 2016 Six Months Ended August 31, 2015
Operating Segments Operating Segments
   Wireless       Corporate    Wireless    Corporate
DataCom Satellite Expenses    Total DataCom   Satellite    Expenses    Total
Revenues $ 166,557 $ 15,069     $ 181,626 $ 119,645 $ 15,592 $   135,237
Gross profit $ 68,719 $ 3,729 $ 72,448 $ 44,686 $ 4,143 $ 48,829
Gross margin 41.3 % 24.7 % 39.9 % 37.3 % 26.6 % 36.1 %
Operating income $   6,072 $   1,547 $      (5,751 ) $   1,868 $   14,419 $   2,777 $      (2,254 ) $ 14,942

The Company considers operating income to be a primary measure of operating performance of its business segments. The amount shown for each period in the “Corporate Expenses” column above consists of expenses that are not allocated to the business segments. These non-allocated corporate expenses include salaries and benefits of certain corporate staff and expenses such as audit fees, investor relations, stock listing fees, director and officer liability insurance, and director fees and expenses.

Products of the Company's Satellite segment were sold to EchoStar. In August 2016, EchoStar ceased purchasing products from CalAmp and the Satellite business was shut down effective August 31, 2016. Historically, shared service expenses for accounting, human resources, information technology and legal administration have been allocated to the two reporting segments. Any such shared expenses that will not be eliminated in future periods as a result of the shutdown of the Satellite business have been reclassified in the segment information for all periods presented from the Satellite segment to the Wireless DataCom segment, with no effect on total operating income.

In fiscal 2016 and the first half of fiscal 2017, Satellite segment revenues accounted for only 14% and 8%, respectively, of the Company’s consolidated revenues. After giving retroactive effect to the reclassification of general and administration expense from the Satellite segment to the Wireless DataCom segment for shared service expenses that will not be eliminated as a result of the Satellite business shutdown, Satellite segment operating income in fiscal 2016 and the first half of fiscal 2017 represented 23% and 20%, respectively, of total business unit operating income, excluding corporate expenses not allocated to the business units of $6,480,000 and $5,751,000 in fiscal 2016 and the first half of fiscal 2017. Also, as a result of transitioning the Satellite business to a variable cost operating model in fiscal 2012, in which all DBS product manufacturing was moved to a contract manufacturer, assets and liabilities of the Satellite segment represented only about 2% of consolidated assets and liabilities at the end of fiscal 2016. Accordingly, CalAmp believes that the shutdown of the Satellite segment does not qualify for discontinued operations accounting treatment because it represents neither a strategic shift nor did it have or will it have a major impact on the Company’s business or consolidated financial statements. 

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COMMITMENTS AND CONTINGENCIES
6 Months Ended
Aug. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 16 - COMMITMENTS AND CONTINGENCIES

Lease Commitments

A summary of future payments of operating lease commitments is as follows (dollars in thousands):

2017 (remainder) $      3,621
2018   6,109
2019 4,656
2020 3,013
2021 1,559
Thereafter 3,712
Total $ 22,670

Legal Proceedings

Omega patent infringement claim

In December 2013, a patent infringement lawsuit was filed against the Company by Omega Patents, LLC, (“Omega”), a non-practicing entity. Omega alleged that certain of the Company’s vehicle tracking products infringed on certain patents asserted by Omega. On February 24, 2016, a jury in the U.S. District Court for the Middle District of Florida awarded Omega damages of $2.9 million, for which CalAmp recorded a full reserve in the fiscal 2016 fourth quarter. Following trial, Omega brought a motion seeking entry of judgment, an injunction and requesting the court to exercise its discretion to treble damages and assess attorneys’ fees. The Company filed an opposition to Omega’s motion, and the judge’s ruling has not yet been rendered. Motions for judgment as a matter of law and a new trial have not yet been filed because no judgment has been entered. If, following resolution of all post-trial motions, judgment is ultimately entered in Omega’s favor, CalAmp intends to pursue an appeal at the Court of Appeals for the Federal Circuit. In addition to its appeal, CalAmp is seeking to invalidate a number of Omega’s patents in actions filed with the U.S. Patent and Trademark Office. Notwithstanding the adverse jury verdict, the Company continues to believe that its products do not infringe Omega’s patents and that Omega’s patents are not valid, and accordingly CalAmp intends to continue pursuing its judicial and administrative options. While it is not feasible to predict with a high degree of certainty the outcome of this litigation, its ultimate resolution could be material to CalAmp’s cash flows and results of operations. Furthermore, if an injunction is issued by the court, the Company could be prevented from manufacturing and selling a number of its products, which could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Orbcomm patent infringement claim

On April 7, 2016, a patent infringement lawsuit was filed against the Company by Orbcomm Inc. (“Orbcomm”) in the U.S. District Court for the Eastern District of Virginia. Orbcomm alleged that certain of the Company’s systems for tracking, monitoring, and controlling vehicles, machinery, and other assets infringed on certain patents asserted by Orbcomm. Orbcomm has not yet made a specific damages claim, but seeks compensatory damages, treble damages, and an injunction. The Company believes that its products and services do not infringe Orbcomm’s patents and/or that Orbcomm’s patents are invalid. On May 27, 2016, the Company filed a motion to dismiss Orbcomm’s claims on the basis, inter alia, that Orbcomm’s patents are directed at ineligible subject matter and are therefore invalid under 35 U.S.C. § 101. On July 22, 2016, the court denied CalAmp’s motion; however, in light of new Federal Circuit case law, CalAmp filed a motion for reconsideration of its motion to dismiss, and the court has received briefs and scheduled an oral argument, regarding certain aspects of CalAmp’s motion, for October 13, 2016. Regardless of the outcome of its motion to dismiss, the Company intends to vigorously defend itself against Orbcomm’s claims. In addition, on July 19, 2016, CalAmp filed with the court its first amended answer to Orbcomm’s complaint, which included an affirmative defense and a counterclaim alleging that Orbcomm’s patents were unenforceable due to inequitable conduct. Orbcomm then filed a motion to dismiss CalAmp’s inequitable conduct counterclaim and to strike CalAmp’s inequitable conduct defense. On September 9, 2016, the court denied Orbcomm’s motion to dismiss and strike. At this early stage of the lawsuit, it is not feasible to predict with any certainty the outcome of this litigation, and the Company has made no accrual for this claim.

G.L.M. contract claim

On October 13, 2010, a suit was filed by G.L.M. Security & Sound, Inc. (“G.L.M.”) against LoJack in the United States District Court for the Eastern District of New York (the “Court”) alleging breach of contract, misrepresentation, and violation of the New York franchise law, Mass. Gen. Laws c. 93A and the Robinson-Patman Act, among other claims. G.L.M. sought damages of $10,000,000, punitive damages, interest and attorney’s fees, and treble damages. On September 19, 2014, the Court entered summary judgment in favor of LoJack on G.L.M’s three remaining claims for breach of contract, breach of the duty of good faith and fair dealing, and violation of Mass. Gen. Laws c. 93A. The Court denied G.L.M.’s attempt to amend its complaint on the basis of futility and undue delay. The Court also entered summary judgment in favor of LoJack on its counterclaim for breach of contract. On August 21, 2015, the Court issued a Memorandum and Opinion with respect to LoJack’s claim for damages on its breach of contract counterclaim. The Court found that LoJack is entitled to recover damages and interest on its counterclaim in the total amount of $1.9 million. The Court ordered that judgment enter in that amount and that the case be closed. On August 25, 2015, the clerk of the Court entered judgment in LoJack’s favor. On September 23, 2015, G.L.M. filed a notice of appeal in the Court of Appeals for the Second Circuit. On August 2, 2016, the Second Circuit issued a Mandate on the Summary Order affirming the Court’s August 15, 2015 judgment. The Company is now embarking on collecting its judgment, but there can be no assurances that the Company will be able to recover the full amount of the judgment, if any.

EVE battery claim

LoJack was notified in 2013 by some of its international licensees that some of the batteries manufactured by LoJack’s former battery supplier, EVE Energy Co., Ltd. (“EVE”), and included in self-powered LoJack units these licensees had purchased from LoJack, exhibited degraded performance below LoJack’s quality standards. These notifications led LoJack to perform its own investigation. As a result of this investigation, LoJack confirmed that batteries manufactured by EVE that were included in certain self-powered LoJack units sold in the United States and to LoJack’s international licensees were exhibiting a failure to power over a period of time that could impact the ability of the LoJack unit to transmit a signal when called upon for stolen vehicle recovery. LoJack manufactures both vehicle and self-powered (battery) units and this degraded performance potentially affects only the transmit battery pack in the self-powered units. As of the date of this report, the majority of LoJack units in circulation are vehicle powered.

LoJack has incurred, and expects to continue to incur, costs and expenses related to the actions that it decided to take to address this matter. These costs and expenses may include, among others, those related to quality assurance programs, product or battery replacements, warranty claims, extension of product warranties, legal and other professional fees, litigation, and payments or other business concessions to LoJack’s customers. Because of the ongoing nature of this matter, the Company cannot predict what other actions will be required, nor can it predict the outcome nor estimate the possible loss or range of loss with respect to any such actions. See Note 13 for the accrued warranty cost liability related to this matter.

LoJack filed a formal claim under its relevant insurance policy and was paid $5,000,000.

On October 27, 2014, LoJack and its wholly-owned subsidiary LoJack Ireland commenced arbitration proceedings against EVE by filing a notice of arbitration with a tribunal of with the Hong Kong International Arbitration Centre (the “Tribunal”). The filing alleges that EVE breached representations and warranties made in a supply agreement relating to the quality and performance of batteries supplied by EVE. The arbitration proceedings against EVE were held in Hong Kong on June 6 to 24, 2016. The Tribunal held an additional hearing on September 15 to 16, 2016, and the Tribunal has scheduled an additional hearing for January 9 to 10, 2017, focused on damages. The Company cannot predict the ultimate outcome of the arbitration proceedings or the amount of damages, if any, that the Company may be awarded by the Tribunal.

In addition to the foregoing matters, from time to time as a normal consequence of doing business, various claims and litigation may be asserted or commenced against the Company. In particular, the Company in the ordinary course of business may receive claims concerning contract performance, or claims that its products or services infringe the intellectual property of third parties. While the outcome of any such claims or litigation cannot be predicted with certainty, management does not believe that the outcome of any of such matters existing at the present time would have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

LoJack Financing Recourse Agreement

LoJack’s financing recourse agreement to certain automobile dealers represents the maximum potential amount of future payments under an agreement with a certain financing company. Pursuant to the recourse agreement, the Company will reimburse participating dealers the unamortized dealer cost of LoJack units purchased by customers via auto loans underwritten by the financing company upon a borrower’s default within the initial 18 months of the auto loan. This agreement was renewed for the year ending December 31, 2016. Based on the unamortized cost of units sold and assuming the default of all borrowers, the Company’s maximum potential amount of future payments under this agreement is $4.2 million as of August 31, 2016. The expected obligation is accrued based on sales to the participating dealers and historical loss experience. As of August 31, 2016, the Company had accrued $73,000 under these guarantees. Accruals for the financing recourse agreement are recorded as a reduction of revenue in the consolidated statement of operations.

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
6 Months Ended
Aug. 31, 2016
Accounting Policies [Abstract]  
Description of Business

Description of Business

CalAmp Corp. (“CalAmp” or the “Company”) is a leading provider of wireless communications solutions for a broad array of applications to customers globally. The Company’s business activities are organized into its Wireless DataCom and Satellite business segments.

In March 2016, the Company completed the acquisition of all outstanding shares of common stock of LoJack Corporation (“LoJack”), a global leader in products and services for tracking and recovering cars, trucks and other valuable mobile assets. See Note 2 for a description of this acquisition.

Up to and including the quarter ended August 31, 2016, products of the Company's Satellite segment were sold to EchoStar, an affiliate of Dish Network, for incorporation into complete subscription satellite television systems. In April 2016, EchoStar notified the Company that it would stop purchasing products from the Company at the end of its then-current product demand forecast as a result of a consolidation of its supplier base. EchoStar’s product demand forecast with the Company extended through August 2016, and the products covered by this forecast were substantially all shipped prior to August 31, 2016. In light of the fact that EchoStar accounted for essentially all of the revenues of the Satellite segment, the Company’s Satellite business was shut down effective August 31, 2016.

Certain notes and other information included in the Company’s Annual Report on Form 10-K are condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the Company’s 2016 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on April 20, 2016.

In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the Company’s financial position at August 31, 2016 and its results of operations for the three and six months ended August 31, 2016 and 2015. The results of operations for such periods are not necessarily indicative of results to be expected for the full fiscal year.

All significant intercompany transactions and accounts have been eliminated in consolidation.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue from product sales when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection of the sales price is reasonably assured. Generally, for product sales that are not bundled with an application service these criteria are met at the time product is shipped, except for shipments made on the basis of “FOB Destination” terms, in which case title transfers to the customer and the revenue is recorded by the Company when the shipment reaches the customer. Customers generally do not have a right of return except for defective products returned during the warranty period. The Company records estimated commitments related to customer incentive programs as reductions of revenues.

In addition to product sales, the Company provides Software as a Service (SaaS) subscriptions for its fleet management and vehicle telematics applications through which customers are provided with the ability to wirelessly communicate with monitoring devices installed in vehicles and other mobile or remote assets via software applications hosted by the Company. Generally, the Company defers the recognition of revenue for the products that are sold with application subscriptions because the products are not functional without the application services. In such circumstances, the associated product costs are recorded as deferred costs in the balance sheet. The deferred product revenue and deferred product cost amounts are amortized to application subscriptions revenue and cost of revenue on a straight-line basis over minimum contractual subscription periods of one to five years. Revenues from renewals of data communication services after the initial contract term are recognized as application subscriptions revenue when the services are provided. When customers prepay application subscription renewals, such amounts are recorded as deferred revenues and are recognized ratably over the renewal term.

In the United States, the Company generally recognizes revenue on LoJack product sales that have no associated continuing service obligations on the part of the Company upon installation of the products. Revenue relating to sales made to the Company’s third party installation partners, who purchase the Company’s products and perform installations themselves, is recognized upon shipment, which is prior to the installation of the related products in the end user’s vehicle. Revenue from the sales of products to international licensees is recognized upon shipment of the products to the licensee or when payment becomes reasonably assured, whichever is later.

In Italy, the purchase of an initial monitoring service contract is a requirement at the time the consumer purchases a LoJack product. Revenue is recognized over the life of the contract. These contracts, which are sold separately from the LoJack hardware, are offered for terms ranging from 12 to 60 months and are generally payable in full upon activation of the related unit or renewal of a previous contract. Customers are also offered a month-to-month option for service contracts.

The Company offers several types of extended warranty contracts in the United States. For those contracts for which an independent third party insurer, and not the Company, is the primary obligor, the Company recognizes revenue at the time of the sale of the warranty. For those warranty products to which the Company is the primary obligor, revenue is deferred and is recognized over five years, which is the estimated life of new vehicle ownership. For the majority of extended warranty contracts originated after 2011, the Company recognizes revenue at the time of sale.

For those warranties for which an independent third party insurer, and not the Company, is the primary obligor, the Company records revenue on a gross basis, with related costs being included in cost of goods sold. The Company considered the factors for gross and net revenue recording and determined that despite not being the primary obligor for the majority of these arrangements, gross revenue reporting was appropriate based on the relevant accounting guidance. Specifically, the Company has latitude in establishing price; it can change the product offering; it has discretion in supplier selection; it is involved in the determination of product or service specifications; it bears the credit risk; and the amount that it earns on each contract is not fixed.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with remaining maturities at date of purchase of three months or less to be cash equivalents.

Fair Value Measurements

Fair Value Measurements

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly manner in an arms-length transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has elected the fair value option for its investment in marketable securities on a contract-by-contract basis at the time each contract is initially recognized in the financial statements or upon an event that gives rise to a new basis of accounting for the items.

Foreign Currency Translation and Accumulated Other Comprehensive Loss Account

Foreign Currency Translation and Accumulated Other Comprehensive Loss Account

A cumulative foreign currency translation loss of $850,000 related to the Company’s foreign subsidiaries is included in accumulated other comprehensive income (loss) in the stockholders’ equity section of the consolidated balance sheet at August 31, 2016. The aggregate foreign currency transaction exchange rate gains (losses) included in determining income (loss) before income taxes and equity in net loss of affiliate were $405,000 and $(29,000) in the six months ended August 31, 2016 and 2015, respectively.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-09, Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). This update is intended to simplify the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those fiscal years. The Company is currently evaluating the impact of adoption of the new standard on its consolidated financial statements.

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Early adoption is permitted. The Company is currently evaluating the impact of adoption of the new standard on its consolidated financial statements.

In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). This standard revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments. Under the new guidance, entities will have to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. ASU 2016-01 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of this revenue standard for periods beginning after December 15, 2016 to December 15, 2017, with early adoption permitted but not earlier than the original effective date. ASU 2014-09 must be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is continuing to evaluate the effect and methodology of adopting this accounting standard on its results of operations, cash flows and financial position.

In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). This update amends the definition of a discontinued operation, and requires additional disclosures about discontinued operations, as well as disposal transactions that do not meet the discontinued operations criteria. Under this new guidance, only disposals of a component representing a strategic shift in operations that has or will have a major impact on the Company’s operations or financial results should be classified as discontinued operations. The effective date of this standard was March 1, 2015. See Note 15 which describes the effect of the adoption of this standard.

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LOJACK ACQUISITION (Tables)
6 Months Ended
Aug. 31, 2016
Business Acquisition [Line Items]  
Summary of Purchase Price Allocation

Purchase price             $        131,735
Less cash acquired, net of debt assumed (9,303 )
       Net cash paid 122,432
Fair value of net assets acquired:
       Current assets other than cash $        41,532
       Property and equipment 12,259
       Developed technology 8,200
       Tradename 35,500
       Customer lists 4,650
       Dealer relationships 16,850
       Other non-current assets 4,208
       Deferred tax liability (2,700 )
       Current liabilities (33,457 )
       Deferred revenue, non-current (8,698 )
       Other non-current liabilities (2,584 )
              Total fair value of net assets acquired 75,760
Goodwill $ 46,672
Summary of Pro Forma Information

      Pro Forma
Six Months Ended
August 31,
2016       2015
Revenues $      186,881 $      200,539
Net income $ 5,447 $ 2,120
 
Earnings per share:
       Basic $ 0.15 $ 0.06
       Diluted $ 0.15 $ 0.06
 
Shares used in computing earnings per share:
       Basic 36,425 36,049
       Diluted 36,931 36,691
Schedule of Adjustments

Pro Forma
Six Months Ended
August 31,
      2016       2015
LoJack standalone net income:
       From March 1 to March 14, 2016 $       973 $       -
       For the six month period ended September 30, 2015 - 2,669
Increase (decrease) in revenue for fair valuation of
       deferred revenue 984 (984 )
(Increase) decrease in costs and expenses:  
       Amortization of inventory step-up 4,318 (4,318 )
       Amortization of intangible assets and depreciation of
              property, equipment and improvements acquired         (309 ) (3,700 )
       Acquisition and integration expenses 3,539 (3,195 )
       Net increase (decrease) in pretax income (loss) 9,505 (9,528 )
Income tax effects (1,920 ) 4,090
Change in net income (loss) 7,585 (5,438 )
Net income (loss) as reported (2,138 ) 7,558
Pro forma net income loss $ 5,447 $ 2,120

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CASH, CASH EQUIVALENTS AND INVESTMENTS (Tables)
6 Months Ended
Aug. 31, 2016
Cash and Cash Equivalents [Abstract]  
Schedule of Cash and Marketable Securities

As of August 31, 2016
Balance Sheet Classification
of Fair Value
Unrealized Cash and Short-Term
Adjusted Gains Fair Cash Marketable Other
Cost (Losses) Value Equivalents Securities Assets
Cash       $      31,665       $             -       $      31,665       $           31,665       $           -       $       -
 
Level 1:
       Commercial paper 40 - 40 40 - -
       Mutual funds (1) 5,171 67 5,238 - - 5,238
       Equity investment in
              French licensee (2) 296 (10 ) 286 - - 286
 
Level 2:
       Repurchase agreements 63,000 - 63,000 63,000 - -
       Corporate bonds 22,302 (3 ) 22,299 - 22,299 -
 
Total $ 122,474 $ 54 $ 122,528 $ 94,705 $ 22,299 $ 5,524

As of February 29, 2016
Balance Sheet Classification
  of Fair Value
Unrealized Cash and Short-Term
Adjusted Gains Fair Cash Marketable Other
      Cost       (Losses)       Value       Equivalents       Securities       Assets
Cash $      6,890 $        - $      6,890 $      6,890 $      - $      -
 
Level 1:
       Mutual funds (1) 3,753 (383 ) 3,370 - - 3,370
       LoJack common stock (3) 4,050 1,416 5,466 - - 5,466
 
Level 2:
       Repurchase agreements 130,900 - 130,900 130,900 - -
       Corporate bonds 82,300 (16 ) 82,284 1,556 80,728
       Commercial paper 8,032 - 8,032 42 7,990 -
 
Total $ 235,925 $ 1,017 $ 236,942 $ 139,388 $ 88,718 $ 8,836

       (1)        The Company has established a non-qualified deferred compensation plan for certain members of management and all non-employee directors. The Company is informally funding its obligations under the deferred compensation plan by purchasing shares in various equity, bond and money market mutual funds that are held in a “Rabbi Trust” and are restricted for payment of obligations to plan participants. The deferred compensation plan liability is included in Other Non-current Liabilities in the accompanying consolidated balance sheets.
 
(2) The equity investment in LoJack’s French licensee, in the form of a publicly-traded common stock, is accounted for as an available-for-sale security and is valued at the quoted closing price on its market exchange. The related unrealized gains or losses are included in accumulated other comprehensive income (loss) in the stockholders’ equity section of the consolidated balance sheet.
 
(3) The Company purchased 850,100 shares of LoJack common stock in the open market in November and December 2015, prior to entering into a definitive agreement to acquire 100% of LoJack’s common stock. These shares were considered trading securities and were recorded at fair value as of February 29, 2016.
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INVENTORIES (Tables)
6 Months Ended
Aug. 31, 2016
Inventory Disclosure [Abstract]  
Schedule of Inventories

August 31,       February 29,
2016   2016
Raw materials $     16,202 $     14,145
Work in process   432 180
Finished goods 11,365 2,406
$ 27,999 $ 16,731
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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)
6 Months Ended
Aug. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Goodwill
Six Months Ended
  August 31,
2016       2015
Balance at beginning of period $      16,508 $      15,483
Acquisition of LoJack 46,672 -
Acquisition of Crashboxx   - 1,025
Balance at end of period $ 63,180 $ 16,508
Schedule of Other Intangible Assets

Gross Accumulated Amortization Net
  Amort-
ization Feb. 29, Addi- Aug. 31, Feb. 29, Aug. 31, Aug. 31, Feb. 29,
   Period    2016    tions    2016    2016    Expense    2016    2016    2016
Supply contract 5 years $    2,220 $     - $    2,220 $    1,679 $    216 $    1,895 $    325 $    541
Developed technology 2-7 years 14,080 8,200 22,280 6,427 1,913 8,340 13,940 7,653
Tradenames 7-10 years 2,143 35,500 37,643 1,522 1,778 3,300 34,343 621
Customer lists 4-7 years 18,300 4,650 22,950 10,358 2,305 12,663 10,287 7,942
Dealer relationships 7 years - 16,850 16,850 - 1,104 1,104 15,746 -
Covenants not to compete 5 years 170 170 128 18 146 24 42
Patents 5 years 273 52 325 62 12 74 251 211
$ 37,186 $ 65,252 $ 102,438 $ 20,176 $ 7,346 $ 27,522 $ 74,916 $ 17,010

Schedule of Future Amortization Expense

Fiscal Year  
2017 (remainder) $     7,730
2018   15,005
2019 11,660
2020 9,652
2021 7,830
Thereafter 23,039
$ 74,916
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.5.0.2
OTHER ASSETS (Tables)
6 Months Ended
Aug. 31, 2016
Other Assets, Noncurrent Disclosure [Abstract]  
Schedule of Other Assets

August 31, February 29,
2016       2016
Deferred compensation plan assets $     5,238 $     3,370
Investment in international licensees 2,327 -
Equity investment in and loans to UK affiliate 1,124 1,167
Other 2,088 637
Investment in LoJack common stock - 5,466
$ 10,777 $ 10,640

XML 38 R28.htm IDEA: XBRL DOCUMENT v3.5.0.2
FINANCING ARRANGEMENTS (Tables)
6 Months Ended
Aug. 31, 2016
FINANCING ARRANGEMENTS AND CONTRACTUAL CASH OBLIGATIONS [Abstract]  
Schedule of Balances Attributable to the Notes

August 31, February 29,
2016       2016
Principal $      172,500 $        172,500
Less: Unamortized debt discount   (25,933 ) (29,002 )
          Unamortized debt issuance costs (3,307 ) (3,698 )
Net carrying amount of the Notes $ 143,260 $ 139,800

XML 39 R29.htm IDEA: XBRL DOCUMENT v3.5.0.2
EARNINGS PER SHARE (Tables)
6 Months Ended
Aug. 31, 2016
Earnings Per Share [Abstract]  
Schedule of Weighted Average Number of Shares

Three Months Ended Six Months Ended
August 31, August 31,
      2016       2015       2016       2015
Basic weighted average number of common
       shares outstanding 36,390 36,135 36,425 36,049
Effect of stock options and restricted stock units
       computed on treasury stock method 459 581 - 642
Diluted weighted average number of common
       shares outstanding      36,849      36,716      36,425      36,691

XML 40 R30.htm IDEA: XBRL DOCUMENT v3.5.0.2
COMPREHENSIVE INCOME (Tables)
6 Months Ended
Aug. 31, 2016
Comprehensive Income  
Schedule of Accumulated Other Comprehensive Loss

Cumulative Unrealized
Foreign Gains/Losses
on Marketable
  Currency
      Translation       Securities       Total
Balances at February 29, 2016 $            (226 ) $                     - $             (226 )
Other comprehensive loss, net of tax (624 ) (8 ) (632 )
Balances at August 31, 2016 $ (850 ) $ (8 ) $ (858 )
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.5.0.2
STOCKHOLDERS' EQUITY (Tables)
6 Months Ended
Aug. 31, 2016
Equity [Abstract]  
Schedule of Stock-based Compensation Expense

Three Months Ended Six Months Ended
August 31,       August 31,
2016       2015 2016       2015
Cost of revenues $      68 $      54 $      132 $      119
Research and development   356 198     537 362
Selling 403 295 698 495
General and administrative 794 842 2,238 1,633
$ 1,621 $ 1,389 $ 3,605 $ 2,609

Summary of Stock Option Activity

Weighted
Number of Average
  Options       Exercise Price
Outstanding at February 29, 2016 860 $              6.96
             
Granted 227 14.49
Exercised (73 ) 10.66
Forfeited or expired (4 ) (15.43 )
Outstanding at August 31, 2016                1,010 $ 8.35
             
Exercisable at August 31, 2016 679 $ 4.95

Summary of Restricted Stock Shares (RSU's), and Performance Stock Units (PSU's) Activity

Number of
Restricted Weighted
Shares,       Average Grant
  PSUs and Date Fair
RSUs Value
Outstanding at February 29, 2016 953 $             16.66
           
Granted 726 14.57
Vested (317 ) 14.65
Forfeited (68 ) 15.73
Outstanding at August 31, 2016                 1,294 $ 16.03

XML 42 R32.htm IDEA: XBRL DOCUMENT v3.5.0.2
PRODUCT WARRANTIES (Tables)
6 Months Ended
Aug. 31, 2016
Product Warranties Disclosures [Abstract]  
Schedule of Product Warranty Liability

Six Months Ended
  August 31,
2016       2015
Balance at beginning of period $      1,892 $      1,819
Assumed from acquisition of LoJack 1,883 $ -
Charged to costs and expenses 530 511
Deductions (1,075 ) (531 )
Balance at end of period $ 3,230 $ 1,799

XML 43 R33.htm IDEA: XBRL DOCUMENT v3.5.0.2
OTHER FINANCIAL INFORMATION (Tables)
6 Months Ended
Aug. 31, 2016
OTHER FINANCIAL INFORMATION [Abstract]  
Schedule of Supplemental Balance Sheet Information

August 31,       February 29,
2016 2016
Deferred compensation plan liability $      5,265 $      3,392
Deferred revenue 6,087 1,070
Deferred rent 458 559
Acquisition-related contingent consideration 583 530
Other 1,107 -
$ 13,500 $ 5,551

Schedule of Investment income (loss)

Three Months Ended Six Months Ended
August 31, August 31,
  2016       2015       2016       2015
Investment income on cash equivalents and marketable securities $        153 $        154   $        329 $        150
Investment income (loss) on deferred compensation plan Rabbi Trust assets        188     (197 ) 465 (165 )
Dividend income 114 - 114 -
Total investment income (loss) $ 455 $ (43 ) $ 908 $ (15 )

Schedule of Interest expense

Three Months Ended Six Months Ended
August 31, August 31,
        2016       2015       2016       2015
Interest expense on convertible senior unsecured notes:  
       Stated interest at 1.625% per annum $      701 $      701 $      1,402 $       882
       Amortization of note discount 1,562 1,353 3,069 1,736
       Amortization of debt issue costs 199 173 391 221
  2,462 2,227 4,862 2,839
Other interest expense 12 53 36 89
Total interest expense $ 2,474 $ 2,280 $ 4,898 $ 2,928
Schedule of Supplemental Cash Flow Information

Six Months Ended
  August 31,
2016       2015
Interest expense paid $       1,447 $       38
Income tax paid $ 979 $ 337

Schedule of Supplemental Non-Cash Investing and Financing Activities

  Six Months Ended
August 31,
2016       2015
Acquisition of Crashboxx in April 2015:
       Accrued liability for earn-out consideration $      - $      455
XML 44 R34.htm IDEA: XBRL DOCUMENT v3.5.0.2
SEGMENT INFORMATION (Tables)
6 Months Ended
Aug. 31, 2016
Segment Reporting [Abstract]  
Summary of Segment Information

  Three Months Ended August 31, 2016 Three Months Ended August 31, 2015
Operating Segments Operating Segments
   Wireless       Corporate    Wireless    Corporate
DataCom Satellite Expenses    Total DataCom   Satellite    Expenses    Total
Revenues $     83,807 $ 6,672   $ 90,479 $ 61,819 $ 7,989   $   69,808
Gross profit $ 36,209 $ 1,405   $ 37,614 $ 23,098 $ 2,205 $ 25,303
Gross margin 43.2 % 21.1 % 41.6 % 37.4 % 27.6 %   36.2 %
Operating income $   5,035 $   139 $      (1,268 ) $   3,906 $   7,529 $   1,557 $      (1,188 ) $ 7,898
                                                                 
  Six Months Ended August 31, 2016 Six Months Ended August 31, 2015
Operating Segments Operating Segments
   Wireless       Corporate    Wireless    Corporate
DataCom Satellite Expenses    Total DataCom   Satellite    Expenses    Total
Revenues $ 166,557 $ 15,069     $ 181,626 $ 119,645 $ 15,592 $   135,237
Gross profit $ 68,719 $ 3,729 $ 72,448 $ 44,686 $ 4,143 $ 48,829
Gross margin 41.3 % 24.7 % 39.9 % 37.3 % 26.6 % 36.1 %
Operating income $   6,072 $   1,547 $      (5,751 ) $   1,868 $   14,419 $   2,777 $      (2,254 ) $ 14,942
XML 45 R35.htm IDEA: XBRL DOCUMENT v3.5.0.2
COMMITMENTS AND CONTINGENCIES (Tables)
6 Months Ended
Aug. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Future Payments of Operating Lease Commitments

2017 (remainder) $      3,621
2018   6,109
2019 4,656
2020 3,013
2021 1,559
Thereafter 3,712
Total $ 22,670
XML 46 R36.htm IDEA: XBRL DOCUMENT v3.5.0.2
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)
$ in Thousands
6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Feb. 29, 2016
Stockholders' equity $ 181,195   $ 189,447
Aggregate foreign currency transaction exchange rate gains (losses) 405 $ (29)  
Cumulative Foreign Currency Translation [Member]      
Stockholders' equity $ (850)   $ (226)
XML 47 R37.htm IDEA: XBRL DOCUMENT v3.5.0.2
LOJACK ACQUISITION (Narrative) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Aug. 31, 2016
Aug. 31, 2015
Mar. 15, 2016
Feb. 29, 2016
Dec. 31, 2015
Business Acquisition [Line Items]              
Inventory $ 27,999   $ 27,999     $ 16,731  
Property, equipment and improvements, net 21,599   21,599     $ 11,225  
Cost of revenue 52,865 $ 44,505 109,178 $ 86,408      
LoJack [Member]              
Business Acquisition [Line Items]              
Investment Owned, Balance, Shares             850,100
LoJack [Member]              
Business Acquisition [Line Items]              
Purchase price     131,735        
Fair value of shares of stock purchased in the open market     5,500        
Net receivables         $ 21,200    
Gross receivables acquired         22,300    
Amounts not expected to be collected         $ 1,100    
Acquisition and integration-related costs 3,539 $ (3,195) 3,539 (3,195)      
Revenues included in results of operations 31,900   59,800        
LoJack [Member] | Fair Value Adjustment to Inventory [Member]              
Business Acquisition [Line Items]              
Inventory acquired 4,600   4,600        
Inventory 300   300        
Cost of revenue     4,318 $ (4,318)      
LoJack [Member] | Fair Value Adjustment to Property, Equipment and Improvements [Member]              
Business Acquisition [Line Items]              
Property, equipment and improvements, net 2,600   $ 2,600        
Cost of revenue $ 400            
XML 48 R38.htm IDEA: XBRL DOCUMENT v3.5.0.2
LOJACK ACQUISITION (Summary of Purchase Price Allocation) (Details) - USD ($)
$ in Thousands
6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Mar. 15, 2016
Feb. 29, 2016
Feb. 28, 2015
Business Acquisition [Line Items]          
Net cash paid $ 1,500      
Fair value of net assets acquired:          
Goodwill 63,180 $ 16,508   $ 16,508 $ 15,483
LoJack [Member]          
Business Acquisition [Line Items]          
Purchase price 131,735        
Less Cash Acquired (9,303)        
Net cash paid $ 122,432        
Fair value of net assets acquired:          
Current assets other than cash     $ 41,532    
Property and equipment     12,259    
Other non-current assets     4,208    
Deferred tax liability     (2,700)    
Current liabilities     (33,457)    
Deferred revenue, non-current     (8,698)    
Other non-current liabilities     (2,584)    
Total fair value of net assets acquired     75,760    
Goodwill     46,672    
LoJack [Member] | Developed Technology Rights [Member]          
Fair value of net assets acquired:          
Finite-lived intangible assets     8,200    
LoJack [Member] | Trade Names [Member]          
Fair value of net assets acquired:          
Finite-lived intangible assets     35,500    
LoJack [Member] | Customer Lists [Member]          
Fair value of net assets acquired:          
Finite-lived intangible assets     4,650    
LoJack [Member] | Dealer Relationships [Member]          
Fair value of net assets acquired:          
Finite-lived intangible assets     $ 16,850    
XML 49 R39.htm IDEA: XBRL DOCUMENT v3.5.0.2
LOJACK ACQUISITION (Schedules of Pro Forma Information) (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Mar. 14, 2016
Aug. 31, 2016
Aug. 31, 2015
Aug. 31, 2016
Sep. 30, 2015
Aug. 31, 2015
Business Acquisition [Line Items]            
Basic weighted average number of common shares outstanding       36,425   36,049
Diluted weighted average number of common shares outstanding       36,931   36,691
Net income (loss)   $ 521 $ 3,499 $ (2,138)   $ 7,558
Revenues   90,479 69,808 181,626   135,237
Cost of revenue   52,865 44,505 109,178   86,408
Income tax benefit (provision)   (864) (2,058) 255   (4,412)
LoJack [Member]            
Business Acquisition [Line Items]            
Revenues       186,881   200,539
Net income (loss)       $ 5,447   $ 2,120
Basic       $ .15   $ 0.06
Diluted       $ 0.15   $ 0.06
Net income (loss) $ 973       $ 2,669  
Revenues       $ 984   $ (984)
Amortization of intangible assets and depreciation of property, equipment and improvements acquired       (309)   (3,700)
Acquisition and integration expenses   $ 3,539 $ (3,195) 3,539   (3,195)
Net increase (decrease) in pretax income (loss)       9,505   (9,528)
Income tax benefit (provision)       (1,920)   4,090
LoJack [Member] | Change In Net Income [Member]            
Business Acquisition [Line Items]            
Change in net income (loss)       7,585   (5,438)
LoJack [Member] | Fair Value Adjustment to Inventory [Member]            
Business Acquisition [Line Items]            
Cost of revenue       $ 4,318   $ (4,318)
XML 50 R40.htm IDEA: XBRL DOCUMENT v3.5.0.2
CASH, CASH EQUIVALENTS AND INVESTMENTS (Details) - USD ($)
$ in Thousands
Aug. 31, 2016
Mar. 15, 2016
Feb. 29, 2016
Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Adjusted Cost $ 122,474   $ 235,925  
Unrealized Gains (Losses) 54   1,017  
Fair Value 122,528   236,942  
LoJack [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Investment Owned, Balance, Shares       850,100
Business Acquisition, Percentage of Voting Interests Acquired   100.00%    
Corporate Bonds [Member] | Fair Value, Inputs, Level 2 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Adjusted Cost 22,302   82,300  
Unrealized Gains (Losses) (3)   (16)  
Fair Value 22,299   82,284  
Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Adjusted Cost 296 [1]   4,050 [2]  
Unrealized Gains (Losses) (10) [1]   1,416 [2]  
Fair Value 286 [1]   5,466 [2]  
Commercial Paper [Member] | Fair Value, Inputs, Level 2 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Adjusted Cost     8,032  
Unrealized Gains (Losses)      
Fair Value     8,032  
Commercial Paper [Member] | Fair Value, Inputs, Level 1 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Adjusted Cost 40      
Unrealized Gains (Losses)      
Fair Value 40      
Cash [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Adjusted Cost 31,665   6,890  
Unrealized Gains (Losses)    
Fair Value 31,665   6,890  
Mutual Funds [Member] | Fair Value, Inputs, Level 1 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Adjusted Cost [3] 5,171   3,753  
Unrealized Gains (Losses) [3] 67   (383)  
Fair Value [3] 5,238   3,370  
Repurchase Agreements [Member] | Fair Value, Inputs, Level 2 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Adjusted Cost 63,000   130,900  
Unrealized Gains (Losses)    
Fair Value 63,000   130,900  
Other Assets [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value 5,524   8,836  
Other Assets [Member] | Corporate Bonds [Member] | Fair Value, Inputs, Level 2 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value      
Other Assets [Member] | Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value 286 [1]   5,466 [2]  
Other Assets [Member] | Commercial Paper [Member] | Fair Value, Inputs, Level 2 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value      
Other Assets [Member] | Commercial Paper [Member] | Fair Value, Inputs, Level 1 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value      
Other Assets [Member] | Cash [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value    
Other Assets [Member] | Mutual Funds [Member] | Fair Value, Inputs, Level 1 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value [3] 5,238   3,370  
Other Assets [Member] | Repurchase Agreements [Member] | Fair Value, Inputs, Level 2 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value    
Short Term Marketable Securities [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value 22,299   88,718  
Short Term Marketable Securities [Member] | Corporate Bonds [Member] | Fair Value, Inputs, Level 2 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value 22,299   80,728  
Short Term Marketable Securities [Member] | Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value [1]   [2]  
Short Term Marketable Securities [Member] | Commercial Paper [Member] | Fair Value, Inputs, Level 2 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value     7,990  
Short Term Marketable Securities [Member] | Commercial Paper [Member] | Fair Value, Inputs, Level 1 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value      
Short Term Marketable Securities [Member] | Cash [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value    
Short Term Marketable Securities [Member] | Mutual Funds [Member] | Fair Value, Inputs, Level 1 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value [3]    
Short Term Marketable Securities [Member] | Repurchase Agreements [Member] | Fair Value, Inputs, Level 2 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value    
Cash and Cash Equivalents [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value 94,705   139,388  
Cash and Cash Equivalents [Member] | Corporate Bonds [Member] | Fair Value, Inputs, Level 2 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value   1,556  
Cash and Cash Equivalents [Member] | Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value [1]   [2]  
Cash and Cash Equivalents [Member] | Commercial Paper [Member] | Fair Value, Inputs, Level 2 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value     42  
Cash and Cash Equivalents [Member] | Commercial Paper [Member] | Fair Value, Inputs, Level 1 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value 40      
Cash and Cash Equivalents [Member] | Cash [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value 31,665   6,890  
Cash and Cash Equivalents [Member] | Mutual Funds [Member] | Fair Value, Inputs, Level 1 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value [3]    
Cash and Cash Equivalents [Member] | Repurchase Agreements [Member] | Fair Value, Inputs, Level 2 [Member]        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Fair Value $ 63,000   $ 130,900  
[1] The equity investment in LoJack's French licensee, in the form of a publicly-traded common stock, is accounted for as an available-for-sale security and is valued at the quoted closing price on its market exchange. The related unrealized gains or losses are included in accumulated other comprehensive income (loss) in the stockholders' equity section of the consolidated balance sheet.
[2] The Company purchased 850,100 shares of LoJack common stock in the open market in November and December 2015, prior to entering into a definitive agreement to acquire 100% of LoJack's common stock. These shares were considered trading securities and were recorded at fair value as of February 29, 2016.
[3] The Company has established a non-qualified deferred compensation plan for certain members of management and all non-employee directors. The Company is informally funding its obligations under the deferred compensation plan by purchasing shares in various equity, bond and money market mutual funds that are held in a "Rabbi Trust" and are restricted for payment of obligations to plan participants. The deferred compensation plan liability is included in Other Non-current Liabilities in the accompanying consolidated balance sheets.
XML 51 R41.htm IDEA: XBRL DOCUMENT v3.5.0.2
INVENTORIES (Details) - USD ($)
$ in Thousands
Aug. 31, 2016
Feb. 29, 2016
Inventory Disclosure [Abstract]    
Raw materials $ 16,202 $ 14,145
Work in process 432 180
Finished goods 11,365 2,406
Inventories $ 27,999 $ 16,731
XML 52 R42.htm IDEA: XBRL DOCUMENT v3.5.0.2
GOODWILL AND OTHER INTANGIBLE ASSETS (Schedule of Goodwill) (Details) - USD ($)
$ in Thousands
6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Goodwill [Line Items]    
Balance at beginning of period $ 16,508 $ 15,483
Acquisitions 46,672 1,025
Balance at end of period 63,180 16,508
LoJack [Member]    
Goodwill [Line Items]    
Acquisitions 46,672
Crashboxx [Member]    
Goodwill [Line Items]    
Acquisitions $ 1,025
XML 53 R43.htm IDEA: XBRL DOCUMENT v3.5.0.2
GOODWILL AND OTHER INTANGIBLE ASSETS (Schedule of Other Intangible Assets) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Aug. 31, 2016
Aug. 31, 2015
Feb. 29, 2016
Finite-Lived Intangible Assets [Line Items]          
Beginning balance     $ 37,186    
Additions     65,252    
Ending balance $ 102,438   102,438    
Beginning balance     20,176    
Expense 3,856 $ 1,655 7,346 $ 3,299  
Ending balance 27,522   27,522    
Net 74,916   $ 74,916   $ 17,010
Supply Contract [Member]          
Finite-Lived Intangible Assets [Line Items]          
Amortization period     5 years    
Beginning balance     $ 2,220    
Additions        
Ending balance 2,220   2,220    
Beginning balance     1,679    
Expense     216    
Ending balance 1,895   1,895    
Net 325   325   541
Developed Technology Rights [Member]          
Finite-Lived Intangible Assets [Line Items]          
Beginning balance     14,080    
Additions     8,200    
Ending balance 22,280   22,280    
Beginning balance     6,427    
Expense     1,913    
Ending balance 8,340   8,340    
Net 13,940   $ 13,940   7,653
Developed Technology Rights [Member] | Minimum [Member]          
Finite-Lived Intangible Assets [Line Items]          
Amortization period     2 years    
Developed Technology Rights [Member] | Maximum [Member]          
Finite-Lived Intangible Assets [Line Items]          
Amortization period     7 years    
Trade Names [Member]          
Finite-Lived Intangible Assets [Line Items]          
Beginning balance     $ 2,143    
Additions     35,500    
Ending balance 37,643   37,643    
Beginning balance     1,522    
Expense     1,778    
Ending balance 3,300   3,300    
Net 34,343   $ 34,343   621
Trade Names [Member] | Minimum [Member]          
Finite-Lived Intangible Assets [Line Items]          
Amortization period     7 years    
Trade Names [Member] | Maximum [Member]          
Finite-Lived Intangible Assets [Line Items]          
Amortization period     10 years    
Customer Lists [Member]          
Finite-Lived Intangible Assets [Line Items]          
Beginning balance     $ 18,300    
Additions     4,650    
Ending balance 22,950   22,950    
Beginning balance     10,358    
Expense     2,305    
Ending balance 12,663   12,663    
Net 10,287   $ 10,287   7,942
Customer Lists [Member] | Minimum [Member]          
Finite-Lived Intangible Assets [Line Items]          
Amortization period     4 years    
Customer Lists [Member] | Maximum [Member]          
Finite-Lived Intangible Assets [Line Items]          
Amortization period     7 years    
Dealer Relationships [Member]          
Finite-Lived Intangible Assets [Line Items]          
Amortization period     7 years    
Beginning balance        
Additions     16,850    
Ending balance 16,850   16,850    
Beginning balance        
Expense     1,104    
Ending balance 1,104   1,104    
Net 15,746   $ 15,746  
Covenants Not to Compete [Member]          
Finite-Lived Intangible Assets [Line Items]          
Amortization period     5 years    
Beginning balance     $ 170    
Additions        
Ending balance 170   170    
Beginning balance     128    
Expense     18    
Ending balance 146   146    
Net 24   $ 24   42
Patents [Member]          
Finite-Lived Intangible Assets [Line Items]          
Amortization period     5 years    
Beginning balance     $ 273    
Additions     52    
Ending balance 325   325    
Beginning balance     62    
Expense     12    
Ending balance 74   74    
Net $ 251   $ 251   $ 211
XML 54 R44.htm IDEA: XBRL DOCUMENT v3.5.0.2
GOODWILL AND OTHER INTANGIBLE ASSETS (Schedule of Future Amortization Expense) (Details) - USD ($)
$ in Thousands
Aug. 31, 2016
Feb. 29, 2016
Fiscal Year    
2017 (remainder) $ 7,730  
2018 15,005  
2019 11,660  
2020 9,652  
2021 7,830  
Thereafter 23,039  
Net $ 74,916 $ 17,010
XML 55 R45.htm IDEA: XBRL DOCUMENT v3.5.0.2
OTHER ASSETS (Details) - USD ($)
3 Months Ended 6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Aug. 31, 2016
Aug. 31, 2015
Feb. 29, 2016
Schedule of Equity Method Investments [Line Items]          
Deferred compensation plan assets $ 5,238,000   $ 5,238,000   $ 3,370,000
Investment in international licensees 2,327,000   2,327,000  
Equity investment in and loans to UK affiliate 1,124,000   1,124,000   1,167,000
Other 2,088,000   2,088,000   637,000
Investment in LoJack common stock     5,466,000
Total 10,777,000   10,777,000   10,640,000
Deferred compensation plan liabilities 5,265,000   5,265,000   $ 3,392,000
Equity in net loss of affiliate (372,000) (684,000)  
Advances to unconsolidated subsidiary     737,000  
Smart Driver Club Limited [Member]          
Schedule of Equity Method Investments [Line Items]          
Equity investment in and loans to UK affiliate $ 1,124,000   1,124,000    
Equity in net loss of affiliate     $ (684,000)    
Ownership percentage of equity-method investments 49.00%   49.00%    
Advances to unconsolidated subsidiary     $ 737,000    
Interest rate on advance     8.00%    
LoJack Mexican Licensee [Member]          
Schedule of Equity Method Investments [Line Items]          
Investment in international licensees $ 1,541,000   $ 1,541,000    
Ownership percentage of cost-method investments 12.50%   12.50%    
LoJack Benelux Licensee [Member]          
Schedule of Equity Method Investments [Line Items]          
Investment in international licensees $ 500,000   $ 500,000    
Ownership percentage of cost-method investments 17.50%   17.50%    
LoJack French Licensee [Member]          
Schedule of Equity Method Investments [Line Items]          
Investment in international licensees $ 286,000   $ 286,000    
Ownership percentage of cost-method investments 5.50%   5.50%    
XML 56 R46.htm IDEA: XBRL DOCUMENT v3.5.0.2
FINANCING ARRANGEMENTS (Bank Credit Facility) (Details) - Line of Credit [Member]
$ in Millions
6 Months Ended
Aug. 31, 2016
USD ($)
Bank Credit Facility  
Maximum borrowing capacity $ 15
Maximum borrowing capacity, percent of eligible accounts receivable 85.00%
Maturity date Mar. 01, 2017
XML 57 R47.htm IDEA: XBRL DOCUMENT v3.5.0.2
FINANCING ARRANGEMENTS (Long-term Debt) (Details)
$ / shares in Units, $ in Thousands, shares in Millions
6 Months Ended
Aug. 31, 2016
USD ($)
$ / shares
shares
Aug. 31, 2015
USD ($)
Feb. 29, 2016
USD ($)
May 31, 2015
USD ($)
Debt Instrument [Line Items]        
Issuance costs attributable to the liability component $ 5,291    
Convertible Senior Notes [Member]        
Debt Instrument [Line Items]        
Debt instrument, face amount $ 172,500   $ 172,500  
Interest rate (as a percent) 1.625%      
Maturity date May 15, 2020      
Conversion rate of shares of common stock 36.2398      
Conversion price (in dollars per share) | $ / shares $ 27.594      
Percentage of repurchase price of the principal amount 100.00%      
Maximum number of shares of common stock that could be issued, following certain corporate events that occur prior to maturity | shares 2.5      
Debt discount to be amortized $ 25,933   $ 29,002 $ 33,600
Effective interest rate 6.20%      
Fair value of the Notes $ 161,000     $ 138,900
XML 58 R48.htm IDEA: XBRL DOCUMENT v3.5.0.2
FINANCING ARRANGEMENTS (Schedule of Balances Attributable to Notes) (Details) - USD ($)
$ in Thousands
Aug. 31, 2016
Feb. 29, 2016
May 31, 2015
Liability component:      
1.625% convertible senior unsecured notes $ 143,260 $ 139,800  
Convertible Senior Notes [Member]      
Liability component:      
Term loan amount 172,500 172,500  
Less: Unamortized debt discount (25,933) (29,002) $ (33,600)
Unamortized debt issuance costs (3,307) (3,698)  
1.625% convertible senior unsecured notes $ 143,260 $ 139,800  
XML 59 R49.htm IDEA: XBRL DOCUMENT v3.5.0.2
EARNINGS PER SHARE (Details) - $ / shares
shares in Thousands
3 Months Ended 6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Aug. 31, 2016
Aug. 31, 2015
Earnings Per Share [Abstract]        
Basic weighted average number of common shares outstanding 36,390 36,135 36,425 36,049
Effect of stock options and restricted stock units computed on treasury stock method 459 581 642
Diluted weighted average number of common shares outstanding 36,849 36,716 36,425 36,691
Shares subject to anti-dilutive stock options and restricted stock-based awards excluded from calculation 450 238   238
Convertible Senior Notes [Member]        
Debt Instrument [Line Items]        
Conversion price (in dollars per share) $ 27.594   $ 27.594  
XML 60 R50.htm IDEA: XBRL DOCUMENT v3.5.0.2
COMPREHENSIVE INCOME (Details)
$ in Thousands
6 Months Ended
Aug. 31, 2016
USD ($)
Accumulated Other Comprehensive Income (Loss) [Line Items]  
Balances at February 29, 2016 $ 189,447
Balances at August 31, 2016 181,195
Cumulative Foreign Currency Translation [Member]  
Accumulated Other Comprehensive Income (Loss) [Line Items]  
Balances at February 29, 2016 (226)
Other comprehensive loss, net of tax (624)
Balances at August 31, 2016 (850)
Unrealized Gains/Losses on Marketable Securities [Member]  
Accumulated Other Comprehensive Income (Loss) [Line Items]  
Balances at February 29, 2016
Other comprehensive loss, net of tax (8)
Balances at August 31, 2016 (8)
Total [Member]  
Accumulated Other Comprehensive Income (Loss) [Line Items]  
Balances at February 29, 2016 (226)
Other comprehensive loss, net of tax (632)
Balances at August 31, 2016 $ (858)
XML 61 R51.htm IDEA: XBRL DOCUMENT v3.5.0.2
STOCKHOLDERS' EQUITY (Narrative) (Details) - USD ($)
$ / shares in Units, $ in Thousands
6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Authorized amount $ 25,000  
Number of shares repurchased 600,000  
Average cost per share $ 14.57  
Repurchases of common stock $ 8,451
Remaining authorized amount $ 16,500  
Vested restricted stock and RSUs retained to cover the the minimum required statutory amount of withholding taxes (Shares) 97,267  
Unrecognized share-based compensation cost $ 21,000  
Unrecognized compensation cost, recognition period 3 years 1 month 6 days  
XML 62 R52.htm IDEA: XBRL DOCUMENT v3.5.0.2
STOCKHOLDERS’ EQUITY (Schedule of Stock-based Compensation Expense) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Aug. 31, 2016
Aug. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]        
Stock-based compensation expense $ 1,621 $ 1,389 $ 3,605 $ 2,609
Cost of Revenues [Member]        
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]        
Stock-based compensation expense 68 54 132 119
Research and Development [Member]        
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]        
Stock-based compensation expense 356 198 537 362
Selling [Member]        
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]        
Stock-based compensation expense 403 295 698 495
General and Administrative [Member]        
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]        
Stock-based compensation expense $ 794 $ 842 $ 2,238 $ 1,633
XML 63 R53.htm IDEA: XBRL DOCUMENT v3.5.0.2
STOCKHOLDERS' EQUITY (Summary of Stock Option Activity) (Details)
shares in Thousands
6 Months Ended
Aug. 31, 2016
$ / shares
shares
Number of Options  
Outstanding, beginning balance | shares 860
Granted | shares 227
Exercised | shares (73)
Forfeited or expired | shares (4)
Outstanding, ending balance | shares 1,010
Exercisable | shares 679
Weighted Average Exercise Price  
Outstanding, beginning balance | $ / shares $ 6.96
Granted | $ / shares 14.49
Exercised | $ / shares 10.66
Forfeited or expired | $ / shares (15.43)
Outstanding, ending balance | $ / shares 8.35
Exercisable | $ / shares $ 4.95
XML 64 R54.htm IDEA: XBRL DOCUMENT v3.5.0.2
STOCKHOLDERS' EQUITY (Summary of Restricted Stock Shares and RSUs Activity) (Details)
shares in Thousands
6 Months Ended
Aug. 31, 2016
$ / shares
shares
Number of Restricted Shares, PSUs and RSUs  
Outstanding, beginning balance | shares 953
Granted | shares 726
Vested | shares (317)
Forfeited | shares (68)
Outstanding, ending balance | shares 1,294
Weighted Average Grant Date Fair Value  
Outstanding, beginning balance | $ / shares $ 16.66
Granted | $ / shares 14.57
Vested | $ / shares 14.65
Forfeited | $ / shares 15.73
Outstanding, ending balance | $ / shares $ 16.03
XML 65 R55.htm IDEA: XBRL DOCUMENT v3.5.0.2
CONCENTRATION OF RISK (Details)
6 Months Ended 12 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Feb. 29, 2016
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Major Customer One [Member]      
Concentration Risk [Line Items]      
Concentration percentage 9.00%   15.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Major Customer Two [Member]      
Concentration Risk [Line Items]      
Concentration percentage 6.00%   10.00%
Inventories [Member] | Supplier Concentration Risk [Member] | Supplier One [Member]      
Concentration Risk [Line Items]      
Concentration percentage 41.00% 56.00%  
Inventories [Member] | Supplier Concentration Risk [Member] | Supplier Two [Member]      
Concentration Risk [Line Items]      
Concentration percentage 11.00% 16.00%  
Accounts Payable [Member] | Supplier Concentration Risk [Member] | Supplier One [Member]      
Concentration Risk [Line Items]      
Concentration percentage 42.00%    
Accounts Payable [Member] | Supplier Concentration Risk [Member] | Supplier Two [Member]      
Concentration Risk [Line Items]      
Concentration percentage 17.00%    
XML 66 R56.htm IDEA: XBRL DOCUMENT v3.5.0.2
PRODUCT WARRANTIES (Details) - USD ($)
$ in Thousands
6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Warranty Reserves [Member]    
Valuation and Qualifying Accounts Disclosure [Line Items]    
Balance at beginning of period $ 1,892 $ 1,819
Assumed from acquisition of LoJack 1,883
Charged to costs and expenses 530 511
Deductions (1,075) (531)
Balance at end of period 3,230 $ 1,799
LoJack Quality Assurance Program [Member] | Warranty Reserves [Member]    
Valuation and Qualifying Accounts Disclosure [Line Items]    
Balance at end of period $ 1,100  
Minimum [Member]    
Valuation and Qualifying Accounts Disclosure [Line Items]    
Warranty Term 12 months  
Maximum [Member]    
Valuation and Qualifying Accounts Disclosure [Line Items]    
Warranty Term 24 months  
XML 67 R57.htm IDEA: XBRL DOCUMENT v3.5.0.2
OTHER FINANCIAL INFORMATION (Schedule of Other Non-Current Liabilities) (Details) - USD ($)
$ in Thousands
Aug. 31, 2016
Feb. 29, 2016
OTHER FINANCIAL INFORMATION [Abstract]    
Deferred compensation plan liability $ 5,265 $ 3,392
Deferred revenue 6,087 1,070
Deferred rent 458 559
Acquisition-related contingent consideration 583 530
Other 1,107
Total other non-current liabilities $ 13,500 $ 5,551
XML 68 R58.htm IDEA: XBRL DOCUMENT v3.5.0.2
OTHER FINANCIAL INFORMATION (Schedule of Investment Income (Loss)) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Aug. 31, 2016
Aug. 31, 2015
OTHER FINANCIAL INFORMATION [Abstract]        
Investment income on cash equivalents and marketable securities $ 153 $ 154 $ 329 $ (165)
Investment income (loss) on deferred compensation plan Rabbi Trust assets 188 (197) 465 150
Dividend income 114 114
Total investment income (loss) $ 455 $ (43) $ 908 $ (15)
XML 69 R59.htm IDEA: XBRL DOCUMENT v3.5.0.2
OTHER FINANCIAL INFORMATION (Schedule of Interest Expense) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Aug. 31, 2016
Aug. 31, 2015
Interest expense on convertible senior unsecured notes:        
Stated interest at 1.625% per annum $ 701 $ 701 $ 1,402 $ 882
Amortization of note discount 1,562 1,353 3,069 1,736
Amortization of debt issue costs 199 173 391 221
Interest expense on convertible notes 2,462 2,227 4,862 2,839
Other interest expense 12 53 36 89
Total interest expense $ 2,474 $ 2,280 $ 4,898 $ 2,928
Convertible Senior Notes [Member]        
Condensed Income Statements, Captions [Line Items]        
Interest rate (as a percent) 1.625%   1.625%  
XML 70 R60.htm IDEA: XBRL DOCUMENT v3.5.0.2
OTHER FINANCIAL INFORMATION (Schedule of Cash Payments for Interest and Income Taxes) (Details) - USD ($)
$ in Thousands
6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
OTHER FINANCIAL INFORMATION [Abstract]    
Interest expense paid $ 1,447 $ 38
Income tax paid $ 979 $ 337
XML 71 R61.htm IDEA: XBRL DOCUMENT v3.5.0.2
OTHER FINANCIAL INFORMATION (Schedule of Non-cash Investing and Financing Activities) (Details) - USD ($)
$ in Thousands
6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Acquisition of Crashboxx in April 2015:    
Accrued liability for earn-out consideration $ 455
XML 72 R62.htm IDEA: XBRL DOCUMENT v3.5.0.2
SEGMENT INFORMATION (Schedule of Segment Information) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended 12 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Aug. 31, 2016
Aug. 31, 2015
Feb. 29, 2016
Segment Reporting Information [Line Items]          
Revenues $ 90,479 $ 69,808 $ 181,626 $ 135,237  
Gross profit $ 37,614 $ 25,303 $ 72,448 $ 48,829  
Gross margin 41.60% 36.20% 39.90% 36.10%  
Operating income $ 3,906 $ 7,898 $ 1,868 $ 14,942  
Operating Segments [Member] | Wireless Datacom [Member]          
Segment Reporting Information [Line Items]          
Revenues 83,807 61,819 166,557 119,645  
Gross profit $ 36,209 $ 23,098 $ 68,719 $ 44,686  
Gross margin 43.20% 37.40% 41.30% 37.30%  
Operating income $ 5,035 $ 7,529 $ 6,072 $ 15,215  
Operating Segments [Member] | Satellite [Member]          
Segment Reporting Information [Line Items]          
Revenues 6,672 7,989 15,069 15,592  
Gross profit $ 1,405 $ 2,205 $ 3,729 $ 4,143  
Gross margin 21.10% 27.60% 24.70% 26.60%  
Operating income $ 139 $ 1,557 $ 1,547 $ 2,777  
Corporate, Non-Segment [Member]          
Segment Reporting Information [Line Items]          
Operating income $ (1,268) $ (1,188) $ (5,751) $ (2,254) $ (6,480)
XML 73 R63.htm IDEA: XBRL DOCUMENT v3.5.0.2
SEGMENT INFORMATION (Narrative) (Details) - Satellite [Member]
6 Months Ended 12 Months Ended
Aug. 31, 2016
Feb. 29, 2016
Sales Revenue, Segment [Member] | Product Concentration Risk [Member]    
Segment Reporting Information [Line Items]    
Concentration percentage 8.00% 14.00%
Sales Revenue, Segment [Member] | Operating Income Concentration Risk [Member]    
Segment Reporting Information [Line Items]    
Concentration percentage 20.00% 23.00%
Assets, Total [Member]    
Segment Reporting Information [Line Items]    
Concentration percentage   2.00%
Liabilities, Total [Member]    
Segment Reporting Information [Line Items]    
Concentration percentage   2.00%
XML 74 R64.htm IDEA: XBRL DOCUMENT v3.5.0.2
COMMITMENTS AND CONTINGENCIES (Lease Commitments) (Details)
$ in Thousands
Aug. 31, 2016
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
2017 (remainder) $ 3,621
2018 6,109
2019 4,656
2020 3,013
2021 1,559
Thereafter 3,712
Total $ 22,670
XML 75 R65.htm IDEA: XBRL DOCUMENT v3.5.0.2
COMMITMENTS AND CONTINGENCIES (Legal Proceedings) (Details) - USD ($)
3 Months Ended 6 Months Ended
Feb. 29, 2016
Aug. 31, 2016
Loss Contingencies [Line Items]    
Amount of damages sought   $ 10,000,000
Amount of payment   5,000,000
Damages awarded $ 2,900,000 1,900,000
Maximum potential amount of future payments   4,200,000
Accrual under guarantee   $ 73,000
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