SEGMENT INFORMATION AND GEOGRAPHIC DATA

6 Months Ended

Aug. 31, 2017

Segment Reporting [Abstract]

SEGMENT INFORMATION

NOTE 13 - SEGMENT INFORMATION AND GEOGRAPHIC DATA

Historically, our business activities were organized into two reportable segments – Wireless DataCom and Satellite. Effective August 31, 2016, we ceased operations of the Satellite business and reported through the first quarter of fiscal 2018 under one reportable segment: Wireless DataCom. In the quarter ended August 31, 2017, we realigned our operations and now operate under two reportable segments: Telematics Systems and Software & Subscription Services. Our organizational structure is based on a number of factors that our CEO, the Chief Operating Decision Maker (“CODM”), uses to evaluate and operate the business, which include, but are not limited to, customer base, homogeneity of products, and technology. We have recast the first quarter of our current fiscal year and certain prior period amounts to conform to the way we internally manage and monitor segment performance.

The Telematics Systems segment offers a portfolio of wireless data communications products which includes asset tracking units, mobile telematics devices, fixed and mobile wireless gateways and routers. These wireless networking devices underpin a wide range of our own and third party software and service solutions worldwide and are critical for applications demanding secure, reliable and business-critical communications.

The Software & Subscription Services segment offers cloud-based, application enablement and telematics service platforms that facilitate integration of our own applications, as well as those of third parties, through open Applications Programing Interfaces (“APIs”) to deliver full-featured IoT solutions to a wide range of customers and markets. Our scalable proprietary SaaS offerings enable rapid and cost-effective deployment of high-value solutions for customers all around the globe.

Segment information for the three and six months ended August 31, 2017 and 2016 is as follows (in thousands):

	Three Months Ended August 31, 2017									Three Months Ended August 31, 2016
	Operating Segments									Operating Segments
			Software &									Software &
	Telematics		Subscription		Corporate					Telematics		Subscription					Corporate
	Systems		Services		Expenses			Total		Systems		Services			Satellite		Expenses			Total
Revenues	$	74,070	$	15,697				$	89,767	$	68,851	$	14,956		$	6,672				$	90,479
Adjusted EBITDA	$	11,505	$	2,050	$	(1,254	)	$	12,301	$	13,484	$	(363	)	$	794	$	(1,062	)	$	12,853

	Six Months Ended August 31, 2017									Six Months Ended August 31, 2016
	Operating Segments									Operating Segments
			Software &									Software &
	Telematics		Subscription		Corporate					Telematics		Subscription				Corporate
	Systems		Services		Expenses			Total		Systems		Services		Satellite		Expenses			Total
Revenues	$	146,066	$	31,782				$	177,848	$	135,974	$	30,583	$	15,069				$	181,626
Adjusted EBITDA	$	24,325	$	3,271	$	(2,114	)	$	25,482	$	24,938	$	680	$	2,409	$	(1,445	)	$	26,582

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.

The Company’s CODM evaluates each segment based on Adjusted EBITDA, and we therefore consider Adjusted EBITDA to be a primary measure of operating performance of our operating segments. We define Adjusted EBITDA as earnings before investment income, interest expense, taxes, depreciation, amortization and stock-based compensation, gain on legal settlement and other adjustments as identified below. The adjustments to our results prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) to calculate Adjusted EBITDA are itemized below (in thousands):

	Three Months Ended						Six Months Ended
	August 31,						August 31,
	2017			2016			2017			2016
Net income (loss)	$	12,232		$	521		$	9,579		$	(2,138	)
Investment income		(396	)		(455	)		(729	)		(908	)
Interest expense		2,567			2,474			5,085			4,898
Income tax provision (benefits)		3,699			864			2,619			(255	)
Depreciation		1,958			2,211			3,983			4,032
Amortization of intangible assets		3,710			3,856			7,568			7,346
Stock-based compensation		2,227			1,621			4,044			3,605
Equity in net loss of affiliate		376			372			713			684
Acquisition and integration expenses		-			-			-			3,539
Non-cash COGS from inventory fair value write-up		-			309			-			4,319
Legal expenses for LoJack battery performance issue		430			1,080			927			1,460
Litigation provision		411			-			6,486			-
Gain on legal settlement		(15,032	)		-			(15,032	)		-
Other		119			-			239			-
Adjusted EBITDA	$	12,301		$	12,853		$	25,482		$	26,582

It is not practicable for the Company to report identifiable assets by segment because these businesses share resources, functions and facilities.

Revenues by geographic area are as follows (in thousands):

	Six Months Ended
	August 31,
	2017		2016
United States	$	129,744	$	136,751
Europe, Middle East and Africa		22,536		25,566
South America		5,779		5,737
Canada		7,561		4,143
Asia and Pacific Rim		6,120		3,425
All other		6,108		6,004
	$	177,848	$	181,626

Revenues by geographic area are based upon the country of billing. The geographic location of distributors and OEM customers may be different from the geographic location of the ultimate end users of the products and services provided by the Company. No single non-U.S. country accounted for more than 10% of the Company’s revenue in the three and six months ended August 31, 2017 and 2016.