10-Q

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 quarter ended August 31, 2019

or

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

For the transition period fromto

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)

Securities registered pursuant toSection 12(b) of the Act:

Title of each class	Trading symbol	Name of Each Exchange On Which Registered
Common stock, $0.01 per share	CAMP	Nasdaq Global Select Market

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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒   No ☐

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

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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, 2019 was 34,120,256.

CALAMP CORP.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED AUGUST 31, 2019

TABLE OF CONTENTS

		Page Number
	PART I – FINANCIAL INFORMATION
ITEM 1.	Financial statements	3
	Condensed consolidated balance sheets (unaudited) as of August 31, 2019 and February 28, 2019	3
	Condensed consolidated statements of comprehensive income (loss) (unaudited) for the three and six months ended August 31, 2019 and 2018	4
	Condensed consolidated statements of cash flows (unaudited) for the six months ended August 31, 2019 and 2018	5
	Condensed consolidated statements of stockholders’ equity (unaudited) for the three and six months ended August 31, 2019 and 2018	6
	Notes to unaudited condensed consolidated financial statements	8
ITEM 2.	Management’s discussion and analysis of financial condition and results of operations	28
ITEM 3.	Quantitative and qualitative disclosures about market risk	36
ITEM 4.	Controls and procedures	36
PART II – OTHER INFORMATION
ITEM 1.	Legal proceedings	37
ITEM 1A.	Risk factors	37
ITEM 6.	Exhibits	38

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CALAMP CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)

	August 31,			February 28,
Assets	2019			2019
Current assets:
Cash and cash equivalents	$	193,684		$	256,500
Short-term marketable securities		7,789			17,512
Accounts receivable, net		75,600			78,079
Inventories		49,541			32,033
Prepaid expenses and other current assets		24,555			19,373
Total current assets		351,169			403,497
Property and equipment, net		56,920			27,023
Operating lease right-of-use assets		27,977			-
Deferred income tax assets		27,863			22,626
Goodwill		104,037			80,805
Other intangible assets, net		69,322			47,165
Other assets		22,154			22,510
	$	659,442		$	603,626
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt	$	124,181		$	-
Accounts payable		40,270			39,898
Accrued payroll and employee benefits		9,329			8,808
Deferred revenue		31,889			24,264
Other current liabilities		15,325			10,622
Total current liabilities		220,994			83,592
Long-term debt, net of current portion		175,916			275,905
Operating lease liabilities		29,780			-
Other non-current liabilities		39,456			38,476
Total liabilities		466,146			397,973
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; 34,113 and 33,555 shares    issued and outstanding at August 31, 2019 and February 28, 2019, respectively		341			336
Additional paid-in capital		213,192			208,205
Accumulated deficit		(18,289	)		(2,227	)
Accumulated other comprehensive loss		(1,948	)		(661	)
Total stockholders' equity		193,296			205,653
	$	659,442		$	603,626

See accompanying notes to condensed consolidated financial statements.

3

CALAMP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	August 31,						August 31,
	2019			2018			2019			2018
Revenues:
Products	$	62,031		$	76,974		$	125,590		$	153,890
Application subscriptions and related products and service		31,205			19,063			56,716			37,035
Total revenues		93,236			96,037			182,306			190,925
Cost of revenues:
Products		37,721			46,045			76,269			93,398
Application subscriptions and related products and service		17,845			10,171			32,956			19,615
Total cost of revenues		55,566			56,216			109,225			113,013
Gross profit		37,670			39,821			73,081			77,912
Operating expenses:
Research and development		7,924			7,599			14,810			14,200
Selling and marketing		15,868			12,523			30,515			25,020
General and administrative		12,893			11,991			30,377			25,427
Restructuring		2,272			566			2,272			3,949
Intangible asset amortization		3,318			2,893			6,358			5,641
Total operating expenses		42,275			35,572			84,332			74,237
Operating income (loss)		(4,605	)		4,249			(11,251	)		3,675
Non-operating income (expense):
Investment income		1,256			1,007			3,337			1,860
Interest expense		(5,555	)		(3,767	)		(11,011	)		(6,432	)
Gain on legal settlement		—			—			—			13,333
Loss on extinguishment of debt (see Note 7)		—			(2,033	)		—			(2,033	)
Other income (expense)		193			(277	)		(206	)		(503	)
Total non-operating income (expense)		(4,106	)		(5,070	)		(7,880	)		6,225
Income (loss) before income taxes and impairment loss and equity in net loss of affiliate		(8,711	)		(821	)		(19,131	)		9,900
Income tax benefit (provision)		1,342			497			3,599			(1,274	)
Income (loss) before impairment loss and equity in net loss of affiliate		(7,369	)		(324	)		(15,532	)		8,626
Impairment loss and equity in net loss of affiliate		-			(530	)		(530	)		(969	)
Net income (loss)	$	(7,369	)	$	(854	)	$	(16,062	)	$	7,657
Earnings (loss) per share:
Basic	$	(0.22	)	$	(0.02	)	$	(0.48	)	$	0.22
Diluted	$	(0.22	)	$	(0.02	)	$	(0.48	)	$	0.21
Shares used in computing earnings (loss) per share:
Basic		33,568			34,850			33,475			35,141
Diluted		33,568			34,850			33,475			36,073
Comprehensive income (loss):
Net income (loss)	$	(7,369	)	$	(854	)	$	(16,062	)	$	7,657
Other comprehensive income (loss):
Foreign currency translation adjustments		(1,018	)		(14	)		(1,287	)		3
Total comprehensive income (loss)	$	(8,387	)	$	(868	)	$	(17,349	)	$	7,660

See accompanying notes to condensed consolidated financial statements.

4

CALAMP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	August 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(16,062	)	$	7,657
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation expense		9,036			4,341
Intangible asset amortization expense		6,358			5,641
Stock-based compensation expense		5,726			5,147
Amortization of discount and debt issuance costs		7,606			4,537
Impairment of operating lease right-of-use (ROU) assets		1,210			—
Noncash operating lease cost		3,100			—
Loss on extinguishment of debt		—			2,033
Impairment loss on equity investment		—			326
Revenue assigned to factors		(3,109	)		—
Deferred tax assets, net		(3,437	)		(211	)
Impairment loss and equity in net loss of affiliate		530			969
Tax benefits on vested and exercised equity awards		—			525
Other		456			115
Changes in operating assets and liabilities:
Accounts receivable		5,763			505
Inventories		(11,429	)		4,878
Prepaid expenses and other assets		(273	)		(4,879	)
Accounts payable		(4,155	)		743
Accrued liabilities		(2,072	)		139
Deferred revenue		2,012			4,367
Operating lease liabilities		(1,640	)		—
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES		(380	)		36,833
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of marketable securities		27,340			32,792
Purchases of marketable securities		(17,617	)		(40,312	)
Capital expenditures		(10,720	)		(5,770	)
Acquisitions, net of cash acquired		(60,634	)		—
Advances to affiliate		(530	)		(1,063	)
Other		3			(78	)
NET CASH USED IN INVESTING ACTIVITIES		(62,158	)		(14,431	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of 2025 Convertible Notes		—			230,000
Payment of debt issuance costs of 2025 Convertible Notes		—			(7,305	)
Purchase of capped call on 2025 Convertible Notes		—			(21,160	)
Repurchase of 2020 Convertible Notes		—			(53,683	)
Proceeds from unwind of note hedges and warrants on 2020 Convertible Notes		—			3,122
Repurchases of common stock		—			(28,564	)
Taxes paid related to net share settlement of vested equity awards		(1,729	)		(3,347	)
Proceeds from exercise of stock options and contributions to employee stock purchase plan (ESPP)		995			101
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(734	)		119,164
EFFECT OF EXCHANGE RATE CHANGES ON CASH		456			(197	)
Net change in cash and cash equivalents		(62,816	)		141,369
Cash and cash equivalents at beginning of period		256,500			132,603
Cash and cash equivalents at end of period	$	193,684		$	273,972

See accompanying notes to condensed consolidated financial statements.

5

CALAMP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

For the Three and Six Months Ended August 31, 2019
											Accumulated
					Additional						Other			Total
	Common Stock				Paid in			Accumulated			Comprehensive			Stockholders'
	Shares		Amount		Capital			Deficit			Loss			Equity
Balances at February 28, 2019		33,555	$	336	$	208,205		$	(2,227	)	$	(661	)	$	205,653
Net loss									(8,693	)					(8,693	)
Stock-based compensation expense						2,543									2,543
Shares issued on net share settlement of equity awards		13		—		(219	)								(219	)
Exercise of stock options		39		—		97									97
Other comprehensive income, net of tax												(269	)		(269	)
Balances at May 31, 2019		33,607	$	336	$	210,626		$	(10,920	)	$	(930	)	$	199,112
Net loss									(7,369	)					(7,369	)
Stock-based compensation expense						3,183									3,183
Shares issued on net share settlement of equity awards		181		2		(1,512	)								(1,510	)
Issuance of shares for restricted stock awards		197		2		(2	)								—
Exercise of stock options and contributions to ESPP		128		1		897									898
Other comprehensive income, net of tax												(1,018	)		(1,018	)
Balance at August 31, 2019		34,113	$	341	$	213,192		$	(18,289	)	$	(1,948	)	$	193,296
See accompanying notes to condensed consolidated financial statements.

6

CALAMP CORP. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) (Unaudited) (Continued) For the Three and Six Months Ended August 31, 2018
													Accumulated
							Additional						Other			Total
	Common Stock						Paid in			Accumulated			Comprehensive			Stockholders'
	Shares			Amount			Capital			Deficit			Loss			Equity
Balances at February 28, 2018		35,718		$	357		$	218,217		$	(19,459	)	$	(199	)	$	198,916
Cumulative adjustment upon adoption of ASU 2016-01, net of tax											434			(434	)		—
Cumulative adjustment upon adoption of ASC 606, net of tax											(1,595	)					(1,595	)
Net income											8,511						8,511
Stock-based compensation expense								2,467									2,467
Shares issued on net share settlement of equity awards		21			—			(233	)								(233	)
Exercise of stock options		38			—			68									68
Repurchases of common stock		(270	)		(2	)		(5,708	)								(5,710	)
Other comprehensive income, net of tax														17			17
Balances at May 31, 2018		35,507		$	355		$	214,811		$	(12,109	)	$	(616	)	$	202,441
Net loss											(854	)					(854	)
Equity component of 2025 Convertible Notes, net of tax								51,902									51,902
Purchase of capped call on 2025 Convertible Notes, net of tax								(15,870	)								(15,870	)
Debt issuance costs of 2025 Convertible Notes allocated to equity, net of tax								(1,649	)								(1,649	)
Equity component of the repurchased 2020 Convertible Notes								(6,088	)								(6,088	)
Unwind of note hedges and warrants of 2020 Convertible Notes								3,122									3,122
Stock-based compensation expense								2,680									2,680
Shares issued on net share settlement of equity awards		135			2			(3,115	)								(3,113	)
Issuance of shares for restricted stock awards		84			1			(1	)								—
Exercise of stock options		17			1			32									33
Repurchases of common stock		(985	)		(11	)		(22,843	)								(22,854	)
Other comprehensive income, net of tax														(14	)		(14	)
Balance at August 31, 2018		34,758		$	348		$	222,981		$	(12,963	)	$	(630	)	$	209,736
See accompanying notes to condensed consolidated financial statements.

7

CALAMP CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED AUGUST 31, 2019 AND 2018

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

Description of Business

CalAmp Corp. (referred to herein as “CalAmp”, “the Company”, “we”, “our”, or “us”) is a telematics pioneer leading transformation in a mobile connected economy. We help reinvent businesses and improve lives around the globe with technology solutions that streamline complex Internet of Things (“IoT”) deployments through wireless connectivity solutions and derived data intelligence. Our software applications, scalable cloud services, and intelligent devices collect and assess business-critical data anywhere from mobile assets and their contents. We are a global organization that is headquartered in Irvine, California. We operate under two reportable segments: Telematics Systems and Software & Subscription Services.

On February 25, 2019, we completed our acquisition of Tracker Network (UK) Limited (“Tracker UK”), a LoJack licensee and a market leader in stolen vehicle recovery (“SVR”) telematics services across the United Kingdom, for a cash purchase price of $13.1 million. On March 19, 2019, we completed the acquisition of Car Track, S.A. de C.V. (“LoJack Mexico”), the exclusive licensee of LoJack technology for the Mexican market. We purchased the remaining 87.5% of the LoJack Mexico shares that we did not own for a cash purchase price of $14.3 million. On April 12, 2019, we acquired Synovia Solutions LLC (“Synovia”), a North American market leader in fleet safety and management for K-12 school bus and state and local government fleets for a cash purchase price of $49.8 million. Combined with the recent acquisitions of Tracker UK and LoJack Mexico, the Synovia acquisition expands our fleet management and vehicle safety services portfolio and accelerates our transformation to high-value subscription-based services. See Note 2 for a description of these acquisitions.

Certain notes and other information included in the audited financial statements in our Annual Report on Form 10-K for the fiscal year ended February 28, 2019 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 our 2019 Annual Report on Form 10-K as filed with the U.S. Securities and Exchange Commission on May 1, 2019.

In the opinion of our management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly our financial position at August 31, 2019 and our results of operations for the three and six months ended August 31, 2019 and 2018. The results of operations for such periods are not necessarily indicative of results to be expected for the full fiscal year.

All intercompany transactions and accounts have been eliminated in consolidation.

Revenue Recognition and related judgments

We recognize revenue as follows:

Products. In accordance with ASC 606, we recognize revenue from product sales upon transfer of control of promised products to customers in an amount that reflects the transaction price, which is generally the stand-alone selling prices of the promised goods. For product shipments made on the basis of “FOB Destination” terms, revenue is recorded when the products reach the customer. Customers generally do not have a right of return except for defective products returned during the warranty period. We record estimated commitments related to customer incentive programs as reductions of revenues.

Professional Services. We also provide various professional services to customers. These include project management, engineering services, installation services and an on-going early warning automated notification service, which are typically distinct from other performance obligations and are recognized as the related services are performed. For certain professional service contracts, we recognize revenue based on the proportion of total costs incurred to-date over the estimated cost of the contract, which is an input method.

Software-as-a-Service (“SaaS”). Our SaaS-based subscriptions for our fleet management, vehicle finance and certain other verticals provide our customers with the ability to wirelessly communicate with monitoring devices installed in vehicles and other mobile or remote assets through our software applications. The transaction price for a typical SaaS arrangement includes the price for the hardware, accessories, installation and application subscriptions. Generally, we defer the recognition of revenue for the customized devices that only function with our applications and are sold on an integrated basis with applicable subscriptions. Such customized devices and the application services are not sold separately. In such circumstances, the associated product costs are recorded as deferred costs on the balance sheet. The upfront fees for the devices are not distinct from the subscription service and are combined into the subscription service performance obligation. Generally, these service arrangements do not provide the customer with the right to take possession of the software supporting the subscription service at any time. Revenues from subscription services are recognized ratably, on a straight-line basis, over the term of the subscription. The deferred product revenue and deferred product cost amounts are amortized to application subscriptions and related products and services revenue along with the cost of revenue, respectively, on a straight-line basis over the estimated average in-service lives of these devices, which are three years in the vehicle finance and four years in the fleet management verticals. In certain fleet management contracts, we provide devices as part of the

8

subscription contracts but we retain control of such devices. Under such arrangements, the cost of the devices is capitalized in the property and equipment and depreciated over the estimated useful life of three to five years. The related subscription revenues of these arrangements are recognized as services are rendered. Our deferred revenue also includes prepayments from our customers for various subscription services but does not include future subscription fees associated with customers’ unexercised contract renewal rights. The product revenues for certain customer arrangements are included within the caption Application subscription and related products and services in our statement of comprehensive income (loss) as the products and services are customarily part of one customer contractual arrangement.

In certain customer arrangements, we also sell devices together with monitoring services, for which revenues for the sales of the devices are recognized upon transfer of control to the customer and monitoring services are recognized over the service period as the devices and services are customarily part of one customer contractual arrangement. The allocation of the transaction price is based on estimated stand-alone selling prices for the devices and the monitoring services. The revenues under these arrangements are also included within caption Application subscription and related products and services revenues in our statement of comprehensive income (loss).

Sales taxes. We exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by us from a customer.

Contract Balances. Timing of revenue recognition may differ from the timing on our invoicing to customers. Contract liabilities are comprised of billings or payments received from our customers in advance of performance under the contract. We refer to these contract liabilities as “Deferred Revenues” in the accompanying condensed consolidated financial statements. During the three and six months ended August 31, 2019, we recognized $6.6 million and $14.2 million in revenue from the beginning deferred revenue balance of $51.4 million on March 1, 2019, respectively. Certain incremental costs of obtaining a contract with a customer consist of deferred costs of hardware and sales commissions. The deferred costs of hardware are capitalized and amortized over the estimated useful life of the device on a straight-line basis. Our contract assets are primarily attributed to prepaid sales commissions, which are recognized on a straight-line basis over the life of the corresponding contracts.

We disaggregate revenue from contracts with customers into reportable segments, geography, type of goods and services and timing of revenue recognition. See Note 17 for our revenue by segment and geography. The disaggregation of revenue by type of goods and services and by timing of revenue recognition was as follows (in thousands):

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
Revenue by type of goods and services:
Telematics devices and accessories	$	65,891	$	79,145	$	134,059	$	160,281
Professional services		2,036		1,453		3,983		2,682
Recurring application subscriptions		25,309		15,439		44,264		27,962
Total	$	93,236	$	96,037	$	182,306	$	190,925

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
Revenue by timing of revenue recognition:
Revenue recognized at a point in time	$	65,891	$	79,145	$	134,059	$	160,281
Revenue recognized over time		27,345		16,892		48,247		30,644
Total	$	93,236	$	96,037	$	182,306	$	190,925

Revenues from telematics devices and accessories presented in the table above are sold on a stand-alone basis and recognized at a point in time. Recurring application subscriptions revenues include the amortization for customized devices functional only with application subscriptions.

As of August 31, 2019, we have estimated the remaining performance obligations for contractually committed revenues of $61.9 million, of which we expect to recognize approximately 30% through the remainder of fiscal 2020, 37% in fiscal 2021 and 20% in fiscal 2022.We have utilized the practical expedient exception and exclude contracts that have original durations of less than one year from the aforementioned remaining performance obligation disclosure.

9

Business Combinations

The purchase price of an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair value at the date of acquisition. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed, such excess is allocated to goodwill. We determine the estimated fair values after review and consideration of relevant information, including discounted cash flows, quoted market prices and other estimates made by management. We may refine the preliminary purchase price allocation, as necessary, during the measurement period of up to one year after the acquisition closing date as we obtain more information as to facts and circumstances existing at the acquisition date impacting the asset valuations and liabilities assumed. Goodwill acquired in business combinations is assigned to the reporting unit expected to benefit from the combination as of the acquisition date. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred.

Cash and Cash Equivalents

We consider all highly liquid investments with maturities at date of purchase of three months or less to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consists of amounts due to us from sales arrangements executed in our normal business activities and are recorded at invoiced amounts. Our payment terms generally range between 30 to 60 days and we do not offer financing options. We present the aggregate accounts receivable balance net of an allowance for doubtful accounts. Generally, collateral and other security is not obtained for outstanding accounts receivable. Credit losses, if any, are recognized based on management’s evaluation of historical collection experience, customer-specific financial conditions as well as an evaluation of current industry trends and general economic conditions. Past due balances are assessed by management on a periodic basis and balances are written off when the customer’s financial condition no longer warrants pursuit of collection. Although we expect to collect amounts due, actual collections may differ from estimated amounts. The allowance for doubtful accounts totaled $3.0 million and $1.8 million as of August 31, 2019 and February 28, 2019, respectively.

Impairment of Goodwill and Other Long-Lived Assets

We evaluate goodwill for impairment on an annual basis in the fourth quarter, or on an interim basis, if we believe indicators of impairment exist. We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we conduct a two-step quantitative goodwill impairment test. The first step of the impairment test involves comparing the fair value of the reporting unit with its carrying value. If the carrying amount of the reporting unit exceeds the reporting unit’s fair value, we perform the second step of the goodwill impairment test. The second step of the goodwill impairment test involves comparing the implied fair value of the reporting unit’s goodwill with the carrying value of the goodwill. The amount by which the carrying value of the goodwill exceeds its implied fair value will be recognized as an impairment loss.

Long-lived assets to be held and used, including identifiable intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. These events or changes in circumstances may include a significant deterioration of operating results, changes in business plans or changes in anticipated future cash flows. If an impairment indicator is present, we evaluate recoverability by a comparison of the carrying amount of the assets or asset group to future undiscounted net cash flows expected to be generated by the lowest level of asset group. Given the interdependencies of revenues across our segments, product and service verticals, and geographies, our asset groups are generally our two operating segments. If the assets or asset group are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets. Fair value is generally determined by estimates of discounted cash flows. The discount rate used in any estimate of discounted cash flows would be the rate required for similar investment of like risk.

Fair Value Measurements

We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in our financial statements. We define 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 arm’s-length transaction between market participants at the measurement date. Fair value is estimated by using the following hierarchy:

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.

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Convertible Senior Notes and Capped Call Transactions

We account for our convertible senior notes as separate liability and equity components. We determine the carrying amount of the liability component based on the fair value of a similar debt instrument excluding the embedded conversion option at the issuance date. The carrying amount of the equity component representing the conversion option is calculated by deducting the carrying value of the liability component from the principal amount of the notes as a whole. This difference represents a debt discount that is amortized to interest expense over the term of the notes using the effective interest rate method. The equity component of the notes is included in stockholders’ equity and is not remeasured as long as it continues to meet the conditions for equity classification. We allocate transaction costs related to the issuance of the notes to the liability and equity components using the same proportions as the initial carrying value of the notes. Transaction costs attributable to the liability component are being amortized to interest expense using the effective interest method over the respective term of the notes, and transaction costs attributable to the equity components are netted with the equity component of the note in stockholders’ equity. We account for the cost of the capped calls as a reduction to additional paid-in capital.

Patent Litigation and Other Contingencies

We accrue for patent litigation and other contingencies whenever we determine that an unfavorable outcome is probable and a liability is reasonably estimable. The amount of the accrual is estimated based on a review of each claim, including the type and facts of the claim and our assessment of the merits of the claim. These accruals are reviewed at least on a quarterly basis and are adjusted to reflect the impact of recent negotiations, settlements, court rulings, advice from legal counsel and other events pertaining to the case. Such accruals, if any, are recorded as general and administrative expense in our consolidated statements of comprehensive income (loss). Although we take considerable measures to mitigate our exposure in these matters, litigation is unpredictable; however, we believe that we have valid defenses with respect to pending legal matters against us as well as adequate provisions for probable and estimable losses. All costs for legal services are expensed as incurred.

Foreign Currency Translation

We translate the assets and liabilities of our non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in foreign currency translation included in accumulated other comprehensive income (loss) during the period. The aggregate foreign currency transaction exchange rate gain (losses) included in determining income (loss) before income taxes were immaterial for both the three and six months ended August 31, 2019 and 2018.

Recently Issued Accounting Standards

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”). The amendments in ASU 2018-15 provide guidance to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by this update. The new guidance is effective for our fiscal year 2021 beginning on March 1, 2020. We do not anticipate this pronouncement will have a significant impact on our consolidated financial statements upon adoption.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. This guidance eliminates Step 2 from the goodwill impairment test and instead requires that an entity measure the impairment of goodwill assigned to a reporting unit if the carrying value of assets and liabilities assigned to the reporting unit, including goodwill, exceed the reporting unit's fair value. The new guidance must be adopted for annual and interim goodwill tests by us in fiscal year 2021 beginning on March 1, 2020. After the adoption of this standard, which will be applied prospectively, we will follow a one-step model for goodwill impairment. We do not anticipate this pronouncement will have a significant impact on our consolidated financial statements upon adoption.

In February 2016, the FASB issued ASU 2016-02, Leases, which was further clarified by ASU 2018-10, Codification Improvements to Topic 842, Leases, and ASU 2018-11, Leases – Targeted Improvement, both issued in July 2018. ASU 2016-02 affects all entities that lease assets and establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the income statement. ASU 2018-10 clarifies or corrects unintended application of guidance related to ASU 2016-02. The amendments affect narrow aspects of ASU 2016-02 related to the implicit rate in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. ASU 2018-11 adds a transition option for all entities and a practical expedient only for lessors. The transition option allows entities to not apply the new leases standard in the comparative periods, which they present in their financial statements in the year of adoption. Under the transition option, entities can opt to continue to apply the legacy guidance in ASC 840, “Leases”, including its disclosure requirements, in the comparative periods presented in the year they adopt the new leases standard. Entities that elect this transition option will still be required to adopt the new leases standard using the modified retrospective transition method required by the standard, but they will recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. For leases existing at, or entered into after the beginning of the earliest comparative period presented in the financial statements, lessees and lessors must apply a modified retrospective transition approach.

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We applied the transition requirements on the adoption date of March 1, 2019, rather than at the beginning of the earliest comparative period presented. This approach allows for a cumulative effect adjustment in the period of adoption, and prior periods will not be restated. In addition, we elected the package of practical expedients permitted under the transition guidance, which does not require reassessment of prior conclusions related to contracts containing a lease, lease classification and initial direct lease costs. As an accounting policy election, we excluded short-term leases (term of 12 months or less) from the balance sheet presentation and accounted for non-lease and lease components in a contract as a single lease component for certain asset classes. Effective March 1, 2019, we recorded the impact on our condensed consolidated balance sheet from the recognition of ROU asset and lease liability of $29.8 million and $33.2 million, respectively. However, the impact to our condensed consolidated statements of comprehensive income and condensed consolidated statements of cash flows is not material. See Note 9, Leases, for additional details.

NOTE 2 – ACQUISITIONS

In addition to the Tracker UK acquisition in February 2019, we completed two additional acquisitions, LoJack Mexico and Synovia, during the first quarter of fiscal 2020.

Pursuant to our business combinations accounting policy, we 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. Our estimates and assumptions reflected in such preliminary valuations are subject to change within the measurement period (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. We expect to continue to obtain information to assist in determining the fair values of the net assets acquired during the measurement period. The following are the preliminary purchase price allocations as of August 31, 2019 for the three acquisitions (in thousands):

	Tracker UK						LoJack Mexico						Synovia
Purchase price				$	13,097					$	14,306					$	29,500
Add debt paid at closing					-						-						20,296
Less cash acquired					(66	)					(1,586	)					(905	)
Net cash paid					13,031						12,720						48,891
Less amount released from escrow					(973	)					-						-
Net consideration					12,058						12,720						48,891
Add previously held interest					-						2,021						-
Fair value of net assets and liabilities assumed:
Current assets other than cash	$	3,549					$	4,485					$	10,354
Property and equipment		1,835						4,029						24,840
Customer relationships		2,354						7,000						16,700
Trade name		2,354						-						1,600
Developed technology		1,830						-						3,800
Deferred tax assets		-						-						2,061
Other non-current assets		104						1,301						-
Current liabilities		(3,111	)					(2,361	)					(4,468	)
Due to factors		-						-						(19,692	)
Deferred revenue		(3,162	)					(4,507	)					(4,319	)
Deferred tax liability		(963	)					(1,039	)					-
Other non-current liabilities		(201	)					-						-
Total fair value of net assets acquired					4,589						8,908						30,876
Goodwill				$	7,469					$	5,833					$	18,015

Tracker UK

Effective February 25, 2019, we acquired Tracker UK, a LoJack licensee, for a total purchase price of £10.0 million, or $13.1 million, which was funded from our cash on hand. As a result of the acquisition, Tracker UK became a wholly-owned subsidiary and is consolidated with our financial statements beginning February 25, 2019 as a component of our Software and Subscription Services reportable segment.

We paid a premium (i.e., goodwill) over the fair value of the net tangible and identified intangible assets acquired, as we believe Tracker UK’s highly recognizable brand and extensive law enforcement relationships across the United Kingdom will help us to drive our European expansion by leveraging our complete portfolio of telematics devices, cloud and software services to develop advanced connected car solutions targeting auto dealers, OEMs, insurance providers and other enterprise customers. This acquisition enables us to integrate our European operations around advanced SVR and telematics solutions to support key enterprise customer opportunities on a pan-European basis.

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The goodwill arising from the acquisition of Tracker UK is not deductible for income tax purposes.

LoJack Mexico

On March 19, 2019, we acquired LoJack Mexico, the exclusive licensee of LoJack technology for the Mexican market. LoJack Mexico will leverage our telematics and software-as-a-service solutions to expand product offering to its substantial subscriber base as well as serve auto dealers and OEMs, insurance providers and leasing companies throughout Mexico. We purchased the remaining 87.5% of the LoJack Mexico shares that we did not own for a cash purchase price of $14.3 million. Our previously held 12.5% equity interest in LoJack Mexico was determined to have a fair value of $2.0 million at acquisition date which resulted in a gain of $0.3 million, which was recorded as investment income in our condensed consolidated statements of comprehensive income (loss) for the six months ended August 31, 2019. LoJack Mexico is consolidated with our financial statements effective March 19, 2019 as a component of our Software and Subscription Services reportable segment.

Synovia

In April 2019, we acquired Synovia, a North American market leader in fleet safety and management for K-12 school bus and state and local government fleets, for a total cash purchase price of $49.8 million. Combined with the recent acquisitions of Tracker UK and LoJack Mexico, the Synovia acquisition expands our fleet management and vehicle safety services portfolio. This acquisition also accelerates our transformation to high-value subscription-based services. Synovia is consolidated with our financial statements effective April 12, 2019 as a component of our Software and Subscription Services reportable segment.

In conjunction with the acquisition of Synovia, we assumed the rights and obligations under certain revenue assignment arrangements with several financial institutions (the “Factors”). Pursuant to the terms of the arrangements, Synovia sold to the Factors rights to all future revenues of certain subscription contracts on a non-recourse basis for credit approved accounts. Under ASC 805, Business Combination, we recorded the amounts due to the Factors as a debt obligation at the fair value as of the acquisition date and the outstanding amount is presented as part of our long-term debt in our condensed consolidated balance sheet (see Note 7). The fair value of this debt of $19.7 million was determined using a pre-tax cost of debt of 4.7% at the time of our acquisition of Synovia.

We paid a premium (i.e., goodwill) over the fair value of the net tangible and identified intangible assets acquired, as we believe we will expand our fleet management and vehicle safety services portfolio and will increase our customer reach by bringing high-value and low-churn subscribers.

The goodwill arising from the acquisition of Synovia is deductible for income tax purposes.

We incurred approximately $1.1 million of total acquisition-related costs for the six months ended August 31, 2019 and $0.9 million in fiscal 2019. The acquisition-related costs were primarily legal expenses, which were recorded as part of our general and administrative expenses.

Pro forma financial information for the three and six months ended August 31, 2019 and 2018 for acquired companies is not disclosed as the results are not material to our condensed consolidated financial statements.

NOTE 3 – CASH, CASH EQUIVALENTS AND INVESTMENTS

The following tables summarize our financial instrument assets (in thousands):

	As of August 31, 2019
								Balance Sheet Classification
								of Fair Value
			Unrealized					Cash and		Short-Term
	Adjusted		Gains			Fair		Cash		Marketable		Other
	Cost		(Losses)			Value		Equivalents		Securities		Assets
Cash	$	45,503	$	—		$	45,503	$	45,503	$	—	$	—
Level 1:
Money market funds		64,186		—			64,186		64,186		—		—
Mutual funds (1)		4,401		264			4,665		—		—		4,665
International equities		296		(75	)		221		—		—		221
Level 2:
Repurchase agreements		72,000		—			72,000		72,000		—		—
Corporate bonds		19,784		—			19,784		11,995		7,789		—
Total	$	206,170	$	189		$	206,359	$	193,684	$	7,789	$	4,886

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	As of February 28, 2019
								Balance Sheet Classification
								of Fair Value
			Unrealized					Cash and		Short-Term
	Adjusted		Gains			Fair		Cash		Marketable		Other
	Cost		(Losses)			Value		Equivalents		Securities		Assets
Cash	$	26,084	$	—		$	26,084	$	26,084	$	—	$	—
Level 1:
Money market funds		154,428		—			154,428		154,428		—		—
Mutual funds (1)		6,023		390			6,413		—		—		6,413
International equities		296		(73	)		223		—		—		223
Level 2:
Repurchase agreements		72,000		—			72,000		72,000		—		—
Corporate bonds		21,502		(2	)		21,500		3,988		17,512		—
Total	$	280,333	$	315		$	280,648	$	256,500	$	17,512	$	6,636

(1) Amounts represent various equities, bond and money market mutual funds that are held in a “Rabbi Trust” and are restricted for payment obligations to non-qualified deferred compensation plan participants. In addition to the mutual funds above, our “Rabbi Trust” also included Corporate-Owned Life Insurance (COLI) starting in fiscal 2020. As of August 31, 2019, the cash surrender value of COLI was $2.0 million. 

NOTE 4 - INVENTORIES

Inventories consist of the following (in thousands):

	August 31,		February 28,
	2019		2019
Raw materials	$	22,560	$	14,141
Work in process		3		72
Finished goods		26,978		17,820
	$	49,541	$	32,033

NOTE 5 – GOODWILL AND OTHER INTANGIBLE ASSETS

Other intangible assets consist of the following (in thousands):

		Gross						Accumulated Amortization						Effect of Foreign Currency Translation					Net
	Useful Life	Feb. 28, 2019		Addi- tions		Aug. 31, 2019		Feb. 28, 2019		Expense		Aug. 31, 2019		Aug. 31, 2019			Feb. 28, 2019		Aug. 31, 2019		Feb. 28, 2019
Developed technology	2-7 years	$	23,603		3,800	$	27,403	$	18,253	$	1,553	$	19,806		(118	)		—	$	7,479	$	5,350
Tradenames	10 years		40,091		1,600		41,691		12,644		1,958		14,602		(164	)		—		26,925		27,447
Customer lists	4-7 years		25,304		—		25,304		21,307		840		22,147		—			—		3,157		3,997
Dealer and customer relationships	7-12 years		16,850		23,700		40,550		6,908		1,988		8,896		(303	)		—		31,351		9,942
Patents	5 years		589		—		589		160		19		179		—			—		410		429
		$	106,437	$	29,100	$	135,537	$	59,272	$	6,358	$	65,630	$	(585	)	$	-	$	69,322	$	47,165

Intangible assets with finite lives are amortized on a straight-line basis over the expected period to be benefited by future cash flows. We monitor and assess these assets for impairment on a periodic basis. Our assessment includes various new product lines and services, which leverage the existing intangible assets as well as consideration of historical and projected revenues and cash flows. As of August 31, 2019, we determined that there was no impairment of intangible assets.

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Estimated future amortization expense as of August 31, 2019 is as follows (in thousands):

2020 (remainder)	$	6,559
2021		11,437
2022		9,803
2023		9,583
2024		6,523
Thereafter		25,417
	$	69,322

Changes in goodwill are as follows (in thousands):

	Telematics Systems		Software & Subscription Services			Total
Balance as of February 28, 2019	$	51,203	$	29,602		$	80,805
Acquisition of Synovia and LoJack Mexico (Note 2)		—		23,848			23,848
Effect of exchange rate change on goodwill		—		(564	)		(564	)
Other (1)		—		(52	)		(52	)
Balance as of August 31, 2019	$	51,203	$	52,834		$	104,037

(1) Amount represents adjustment to the preliminary Goodwill from the Tracker UK acquisition.  

NOTE 6 – OTHER ASSETS

Other assets consist of the following (in thousands):

	August 31,		February 28,
	2019		2019
Deferred product cost	$	8,420	$	10,094
Deferred compensation plan assets		6,662		6,413
Equity investment in and loan to ThinxNet GmbH		2,227		2,650
Prepaid commissions		1,330		-
Investment in international licensees		561		2,263
Other		2,954		1,090
	$	22,154	$	22,510

We have a non-qualified deferred compensation plan in which certain members of management and all non-employee directors are eligible to participate. Participants may defer a portion of their compensation until retirement or another date specified by them in accordance with the plan. We are funding the plan obligations through cash deposits to a Rabbi Trust that are invested in various equities, bond, money market mutual funds and COLI in generally the same proportion as investment elections made by the participants. The deferred compensation plan liability is included in other non-current liabilities in the accompanying consolidated balance sheets.

Our investment in international licensees at August 31, 2019 consists of equity interests in Benelux and French licensees. Generally, the investments in international licensees are accounted for using the cost method of accounting and carried at cost as we do not exercise significant influence over these investees. On March 19, 2019, we acquired the remaining equity interest in LoJack Mexico (Note 2) and our original investment of $1.7 million became part of the purchase price upon completing the acquisition of the business.

Effective August 24, 2017, we acquired an ownership interest valued at $1.4 million in ThinxNet GmbH, a company headquartered in Munich, Germany (“ThinxNet”). ThinxNet is an early stage company focused on commercializing cloud-based mobile device and applications in the automotive sector throughout Europe. This represents a cost basis investment as we cannot exercise significant influence over the investee. Contemporaneously, we executed an unsecured convertible note receivable for $1.27 million with an interest rate of 6%, which had an initial fixed term of 12 months, after which the loan could be converted into equity in ThinxNet or a loan due on demand at our option. The equity investment and note receivable were consideration we received in exchange for our outstanding accounts receivable from ThinxNet. No gain or loss was recorded on this exchange. 

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In August 2018, ThinxNet commenced a subsequent financing transaction to raise additional funds for working capital purposes. In connection with this transaction, we converted approximately $300,000 of outstanding accounts receivable due from ThinxNet into additional ownership interest in an in-kind exchange of assets at the current valuation. Based on the fair value of ThinxNet at the time of conversion, we revalued the initial ownership interest and recorded an impairment charge of $326,000, which is netted within Investment Income in our consolidated statement of comprehensive income (loss) for the three months ended August 31, 2018. Effective March 2019, we notified ThinxNet that we expect the outstanding loan to be repaid by June 30, 2019. On June 26, 2019, we agreed to settle the matter providing for repayment by ThinxNet of the outstanding loan in three equal quarterly installments of approximately $423,000 through December 2019. As of August 31, 2019, we received the first quarterly installment.

Our investments in licensees and ThinxNet without readily determinable fair values are measured at cost less impairment, adjusted for observable price changes for an identical or similar investment of the same issuer.

NOTE 7 – FINANCING ARRANGEMENTS

Balances attributable to our financing arrangements consist of the following (in thousands):

	August 31,		February 28,
	2019		2019
2020 Convertible Notes	$	118,199	$	115,249
2025 Convertible Notes		165,001		160,656
Due to Factors under revenue assignment agreements		16,897		-
		300,097		275,905
Less: Current portion		124,181		-
Long-term debt, net of current portion	$	175,916	$	275,905

Revolving Credit Facility

On March 30, 2018, we entered into a revolving credit facility with J.P. Morgan Chase Bank, dated as of March 30, 2018 (the “Credit Agreement”) that provides for borrowings up to $50.0 million. This revolving credit facility expires on March 30, 2020. At our election, the borrowings under this revolving credit facility bear interest at either a LIBOR-based variable rate plus an applicable margin, or at the greater of the Prime Rate, the NYFRB Rate plus an applicable margin rate and one-month LIBOR-based variable rate plus an applicable margin rate (each as defined in the Credit Agreement) determined based on our senior leverage ratio from time to time. The net proceeds available under the revolving credit facility can be used for working capital and general corporate purposes. There were no borrowings outstanding under this revolving credit facility at August 31, 2019.

The revolving credit facility contains certain negative and affirmative covenants including financial covenants that require us to maintain a minimum level of earnings before interest, income taxes, depreciation, amortization and other non-cash charges (Adjusted EBITDA) to interest ratio, a minimum senior indebtedness ratio and a total indebtedness coverage ratio, all measured on a quarterly basis. As of August 31, 2019, we were in compliance with our covenants under the revolving credit facility.

Convertible Senior Unsecured Notes

We have two outstanding convertible senior unsecured notes – a $122.5 million aggregate principal amount of convertible senior unsecured notes due in May 2020 (“2020 Convertible Notes”) and a $230.0 million aggregate principal amount of convertible senior unsecured notes due in August 2025 (“2025 Convertible Notes”, and collectively with the 2020 Convertible Notes, the “Notes”). The Notes are carried at their principal face amount, less unamortized debt discount and issuance costs, and are not adjusted to fair value at each period end.

Accounting guidance requires that convertible debt that can be settled for cash be separated into the liability and equity component at issuance and each be assigned a value. The value assigned to the liability component is the estimated fair value, as of the issuance date, of similar debt without the conversion feature. The difference between the principal amount of the debt and the estimated fair value of the liability component, representing the value of the embedded conversion option assigned to the equity component, is recorded as a debt discount on the issuance date. The fair value of the liability component is generally determined using a discounted cash flow analysis, in which the projected interest and principal payments were discounted back to the issuance date at a market interest rate that represents a Level 3 fair value measurement. The debt discount is amortized to interest expense using the effective interest method with an effective interest rate equal to the aforementioned market interest rate over the term of the debt. The remaining gross proceeds net of the liability component represents the fair value of the embedded conversion feature that was recorded as an increase in additional paid-in capital within the stockholders’ equity section. The associated deferred tax effect was recorded as a reduction of additional paid-in capital. The amounts recorded in additional paid-in capital is not to be remeasured as long as the embedded conversion option continues to meet the conditions for equity classification. As of August 31, 2019, the Notes continue to meet the conditions for equity classification.

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Further, the issuance costs related to the debt are also allocated to the liability and equity components based on the relative fair values. Issuance costs attributable to the liability component were recorded as a direct deduction from the carrying value of the debt and are being amortized to expense over the term of the debt using the effective interest method. The issuance costs attributable to the equity component were recorded as a charge to the additional paid-in capital within stockholders’ equity. Lastly, the deferred tax effect related to the equity component of the issuance costs was also recorded to additional paid-in capital as such costs are deductible for tax purposes.

The table below summarizes the liability and equity components of the Notes, the issuance costs and the applicable assumptions used for the calculation (in millions except initial conversion rate and per share amounts):

	2020 Convertible Notes			2025 Convertible Notes
Initial conversion rate (shares per $1,000 principal amount)		36.2398			32.5256
Initial conversion price per share	$	27.5940		$	30.7450
Fair value of liability component upon issuance	$	138.9		$	160.8
Discount Rate		6.20	%		7.56	%
Fair value measurement level	Level 3			Level 3
Fair value of embedded equity component upon issuance	$	33.6		$	69.2
Deferred tax asset effect	$	16.0		$	17.3
Total issuance cost	$	4.3		$	7.3
Equity component	$	1.0		$	2.2
Deferred tax asset effect	$	0.4		$	0.5
Fair value of convertible notes as of August 31, 2019 (Level 2 measurement)	$	120.5		$	183.1

2020 Convertible Notes

In May 2015, we issued $172.5 million aggregate principal amount of the 2020 Convertible Notes, which are senior unsecured obligations and bear interest at a rate of 1.625% per year payable in cash on May 15 and November 15 of each year. The 2020 Convertible Notes mature on May 15, 2020 unless converted earlier or repurchased in accordance with their terms. We may not redeem the 2020 Convertible Notes prior to their stated maturity date and they will be convertible into cash, shares of our common stock or a combination of cash and shares of common stock, at our election, based on an initial conversion rate and initial conversion price as noted above. Holders may convert their 2020 Convertible 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 “2020 Indenture”). During the period from November 15, 2019 to May 13, 2020, holders may convert all or any portion of their 2020 Convertible Notes regardless of the foregoing conditions. Our intent is to settle the principal amount of the 2020 Convertible Notes in cash upon conversion. If the conversion value exceeds the principal amount, we would deliver shares of common stock in respect to the remainder of the 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 our common stock during each period. As of August 31, 2019, none of the conditions allowing holders of the 2020 Convertible Notes to convert have been met as our shares have been trading under the initial conversion price.

The 2020 Indenture contains customary terms and conditions, including that upon certain events of default occurring and continuing, either the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes, by notice to us and the Trustee, may declare 100% of the principal amount of, and accrued and unpaid interest, if any, on all the 2020 Convertible Notes then outstanding to be due and payable immediately. Such events of default include, without limitation, the default by us or any of our subsidiaries with respect to indebtedness for borrowed money in excess of $10 million and the entry of judgments for the payment of $10 million or more against us or any of our subsidiaries which are not paid, discharged or stayed within 60 days.

If we undergo a fundamental change (as defined in the Indenture), holders of the 2020 Convertible Notes may require us to repurchase their Notes at a repurchase price of 100% of the principal amount of the 2020 Convertible 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, we will increase the conversion rate for a holder who elects to convert our 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.

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In May 2016, in connection with the 2020 Convertible Notes, we entered into note hedge transactions relating to 6.25 million shares of common stock with certain counterparties. The note hedges represent call options from the counterparties with respect to $172.5 million aggregate principal amount of the 2020 Convertible Notes. We paid $31.3 million for the note hedges and, as a result, approximately $19.3 million, net of tax, was recorded as a reduction to additional paid-in capital within stockholders’ equity.

Separately, we entered into warrant transactions with the same counterparties, giving them the right to acquire the same number of shares of common stock that underlie the 2020 Convertible Notes at a strike price of $39.42 per share which represents a premium of 100% over the last reported sale price of our common stock of $19.71 on April 30, 2015, the date on which the 2020 Convertible Notes were priced. The warrants will be exercisable in equal installments for a period of 80 trading days beginning on August 15, 2020. We received a total amount of $16.0 million in cash proceeds from the sale and issuance of the warrants.

On July 20, 2018, we entered into separate, privately negotiated purchase agreements to repurchase approximately $50 million in aggregate principal amount of our 2020 Convertible Notes for $53.8 million including accrued interest, by using a portion of the net proceeds from the 2025 Convertible Notes. The repurchase is accounted for as an extinguishment of debt, not a modification of debt. We allocated the repurchase price of $53.7 million between the fair value of the liability of $47.6 million and the equity component of $6.1 million as of the repurchase date. The fair value of the liability component was determined using a discounted cash flow analysis at a market interest rate for nonconvertible debt of 4.36% based on the remaining maturity of the 2020 Convertible Notes, which represented a Level 3 fair value measurement. The carrying value of the repurchased notes was $45.6 million, resulting in a loss on extinguishment of debt of $2.0 million. We also received proceeds of $3.1 million from the unwinding of the note hedge and warrants, which was recorded as additional paid-in capital.

2025 Convertible Notes

On July 20, 2018, we issued $230.0 million aggregate principal amount of the 2025 Convertible Notes. These notes were issued under an indenture, dated July 20, 2018 (the “2025 Indenture”) between us and The Bank of New York Mellon Trust Company, N.A., as trustee.

The 2025 Indenture contains customary terms and conditions, including that upon certain events of default occurring and continuing, either the Trustee, by notice to us, or the holders of at least 25% in aggregate principal amount of the then outstanding Notes, by notice to us and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the 2025 Convertible Notes then outstanding to become due and payable immediately. Such events of default include, without limitation, the default by us or any of our subsidiaries with respect to indebtedness for borrowed money in excess of $10 million and the entry of judgments for the payment of $15 million or more against us or any of our subsidiaries, which are not paid, discharged or stayed within 60 days.

The 2025 Convertible Notes bear interest at 2.00% per year payable semiannually in arrears in cash on February 1 and August 1 of each year, beginning on February 1, 2019. The 2025 Convertible Notes will mature on August 1, 2025, unless earlier converted, redeemed or repurchased by us in accordance with their terms. We may redeem the Notes at our option at any time on or after August 6, 2022 at a cash redemption price equal to the principal amount plus accrued interest, but only if the last reported sale price per share of our stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice. The 2025 Convertible Notes rank senior in right of payment to any existing or future indebtedness which is subordinated by its terms, ranks equally in right of payment to any indebtedness that is not so subordinated, is structurally subordinated to all indebtedness and liabilities of our subsidiaries and is effectively junior to our secured indebtedness to the extent of the value of the assets securing such indebtedness.

The 2025 Convertible Notes are convertible into cash, shares of our common stock or a combination of both, at our election, based on an initial conversion rate and initial conversion price as noted above. Holders may convert their 2025 Convertible Notes at their option upon the occurrence of certain events, as defined in the 2025 Indenture.

Upon the occurrence of a “make-whole fundamental change” (as defined in the 2025 Indenture), we will in certain circumstances increase the conversion rate for a specific period of time. Additionally, upon the occurrence of a “fundamental change” (as defined in the 2025 Indenture), holders of the notes may require us to repurchase their notes at a cash repurchase price equal to the principal amount of the notes to be repurchased, plus any accrued and unpaid interest. As of August 31, 2019, none of the conditions allowing the holders of the 2025 Convertible Notes to convert have been met.

In July 2018, in connection with the 2025 Convertible Notes, we entered into capped call transactions with certain option counterparties who were initial purchasers of the 2025 Convertible Notes. The capped call transactions are expected to reduce the potential dilution of earnings per share upon conversion of the 2025 Convertible Notes. Under the capped call transactions, we purchased options relating to 7.48 million shares of common stock underlying the notes, with a strike price equal to the conversion price of the notes and with a cap price equal to $41.3875. We paid $21.2 million for the note hedges and as a result, approximately $15.9 million, net of tax, was recorded as a reduction to additional paid-in capital within stockholders’ equity.

Synovia Revenue Assignments

In conjunction with the acquisition of Synovia on April 12, 2019 (see Note 2), we assumed the rights and obligations under certain revenue assignment arrangements with several financial institutions (the “Factors”). Pursuant to the terms of the arrangements, Synovia sold to the Factors

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rights to all future revenues of certain subscription contracts on a non-recourse basis for credit approved accounts. The sales price paid represents a percentage of the total contract value (generally 80%) due to Synovia at the beginning of the contract, with the total customer contract balance to be paid by the customers to the Factors over the contract period. The cost of the transaction was recorded as a contra-liability, and was recognized as interest expense over the term of the subscription contract using the effective interest method, while the assigned customer obligation is amortized to subscription revenues using the straight-line method.

These arrangements with the Factors met the criteria in ASC 470-10-25, Sales of Future Revenues or Various Other Measures of Income (“ASC 470”), which relates to cash received from an investor in exchange for a specified percentage or amount of revenue or other measure of income of a particular product line, business segment, trademark, patent, or contractual right for a defined period. Under this guidance, the arrangement qualified as a debt instrument for accounting purposes due to Synovia’s significant continuing involvement in the generation of cash flows due to the Factors. Further, under ASC 805, Business Combination, we recorded the amounts due to the Factors as a debt obligation at fair value in the opening balance sheet and the outstanding amount is presented as part of our long-term debt in our condensed consolidated balance sheet. The fair value of this debt of $19.7 million was determined using a pre-tax cost of debt of 4.7% at the time of our acquisition of Synovia. The discount of $1.5 million will be amortized under the interest method. During the three and six months ended August 31, 2019, we recognized $0.2 million and $0.3 million of interest expense related to this debt, respectively. The revenues recognized from this arrangement were considered a non-cash activity in our condensed consolidated statements of cash flows for the six months ended August 31, 2019.

NOTE 8 – RESTRUCTURING CHARGES

Beginning in the first quarter of fiscal 2019, we commenced a plan to capture certain synergies and cost savings related to streamlining our global operations and sales organization, as well as rationalize certain leased properties that are not fully occupied. Our plan is aligned with our strategy to integrate the global sales organization and further outsource manufacturing functions in order to drive operational efficiency, increase supplier geographic diversity, and reduce operating expenses. To date, total restructuring charges were $10.3 million, comprised of $5.3 million in severance and employee related costs, and $5.0 million for vacant office and manufacturing facility space. Restructuring charges related to vacant office and manufacturing facility space was due primarily to the vacancy in Canton, Massachusetts of $4.5 million. Substantially all charges related to severance and employee costs were under the Telematics Systems reportable segment. As a result of the adoption of ASC 842, effective March 1, 2019, the balance of the restructuring liability related to certain facility leases have been reclassified as a reduction of the Operating lease right-of-use assets in our condensed consolidated balance sheet.

For the three and six months ended August 31, 2019, total restructuring charges were $2.3 million, comprised of $1.1 million in severance and employee related costs, and $1.2 million for vacant office space. Substantially all charges were recorded under the Telematics Systems reportable segment. The impairment of $1.2 million for the vacant office space was recorded as a reduction of Operating lease right-of-use assets in our condensed consolidated balance sheet as of August 31, 2019. The restructuring liabilities related to personnel were included in Accrued payroll and employee benefits in our condensed consolidated balance sheets as of August 31, 2019 and February 28, 2019.

The anticipated rent payments for the vacant portion of leased facilities will be made through December 2025. There is no guarantee that the termination and cease use charges will not exceed the estimates or that the impact of any future potential sub-lease rentals will be realized. The following table summarizes the activity resulting from the implementation of the restructuring plan within other current and non-current liabilities (in thousands):

	Personnel			Facilities			Total
Restructuring liabilities as of February 28, 2019	$	2,779		$	2,977		$	5,756
Cease-use liability reclassified as reduction of Operating lease right-of-use assets		-			(2,977	)		(2,977	)
Charges		1,063			-			1,063
Payments		(1,314	)		-			(1,314	)
Restructuring liabilities as of August 31, 2019	$	2,528		$	-		$	2,528

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NOTE 9 – LEASES

We have various non-cancelable operating leases for our offices in California, Texas, Massachusetts, Indiana, Minnesota and Virginia in the United States, and Italy, Mexico and the United Kingdom. We also have various non-cancelable operating leases for towers and vehicles throughout the United States, Italy and Mexico. These leases expire at various times through 2028. Certain lease agreements contain renewal options, rent abatement, and escalation clauses that are factored into our determination of lease payments when appropriate.

The table below presents lease-related assets and liabilities recorded on the condensed consolidated balance sheet (in thousands):

	Classification	August 31, 2019
Assets
Operating lease right-of-use assets	Operating lease right-of-use assets	$	27,977
Liabilities
Operating lease liabilities (current)	Other current liabilities	$	6,087
Operating lease liabilities (noncurrent)	Operating lease liabilities		29,780
Total lease liabilities		$	35,867

Lease Costs

The following lease costs were included in our condensed consolidated statements of comprehensive income (loss) as follows (in thousands):

	Three Months Ended August 31, 2019		Six Months Ended August 31, 2019
Operating lease cost	$	1,972	$	3,973
Short-term lease cost		252		564
Variable lease cost		43		73
Total lease cost	$	2,267	$	4,610

Supplemental Information

The table below presents supplemental information related to operating leases during the six months ended August 31, 2019 (in thousands, except weighted-average information):

Cash paid for amounts included in the measurement of operating lease liabilities	$	4,067
Right-of-use assets obtained in exchange for new operating lease liabilities	$	3,728
Weighted average remaining lease term	7.4 years
Weighted average discount rate		5.47	%

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheet as of August 31, 2019 (in thousands):

Remainder of 2020	$	3,853
2021		7,208
2022		6,348
2023		6,089
2024		5,728
Thereafter		15,074
Total minimum lease payments		44,300
Less imputed interest		(8,433	)
Present value of future minimum lease payments		35,867
Less current obligations under leases		(6,087	)
Long-term lease obligations	$	29,780

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Disclosures Related to Periods Prior to Adoption of New Lease Standard

Minimum lease payments under operating leases with non-cancelable terms in excess of one year as of February 28, 2019, were as follows (in thousands):

2020	$	7,565
2021		6,386
2022		6,242
2023		6,199
2024		6,126
Thereafter		7,659
Total minimum lease payments	$	40,177

NOTE 10 - INCOME TAXES

We use the assets and liabilities method when accounting for income taxes. Under this method, deferred income tax asset and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Under U.S. GAAP we are allowed to make an accounting policy choice to either: (1) treat taxes due on future GILTI inclusions in U.S. taxable income as a current-period expense when incurred (the “period cost method”); or (2) factor in such amounts into our measurement of our deferred taxes (the “deferred method”). We have elected to account for GILTI as a period cost in the year the tax is incurred. Accordingly, no GILTI-related deferred amounts were recorded.  

We file income tax returns in the U.S. federal jurisdiction, various U.S. states including Puerto Rico, Mexico, Canada, Ireland, Italy, United Kingdom, the Netherlands, Brazil and New Zealand. Certain income tax returns for the years 2014 through present remain open to examination by U.S. federal and state tax authorities. Our tax returns in the foreign jurisdictions remain open for examination for varying years from 2013 to the present. We believe that we have adequate reserves for any uncertain tax positions. It is reasonably possible the amount of unrecognized tax benefits that could be realized within the next 12 months is $0.6 million.

Our net deferred tax assets increased during the six months ending August 31, 2019 as a result of recording a deferred tax asset for additional net operating loss carryforwards for the period, reversal of valuation allowance against foreign tax credits and recording a preliminary net deferred tax asset relating to our acquisitions through the quarter ended August 31, 2019 (see Note 2).

NOTE 11 - EARNINGS PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) 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 calculation of the basic and diluted income (loss) per share of common stock is as follows (in thousands, except per share value):

	Three Months Ended						Six Months Ended
	August 31,						August 31,
	2019			2018			2019			2018
Net income (loss)	$	(7,369	)	$	(854	)	$	(16,062	)	$	7,657
Basic weighted average number of common shares outstanding		33,568			34,850			33,475			35,141
Effect of stock options and restricted stock units computed on treasury stock method		—			—			-			932
Diluted weighted average number of common shares outstanding		33,568			34,850			33,475			36,073
Earnings (loss) per share:
Basic	$	(0.22	)	$	(0.02	)	$	(0.48	)	$	0.22
Diluted	$	(0.22	)	$	(0.02	)	$	(0.48	)	$	0.21

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All outstanding options and restricted stock units for the three and six months ended August 31, 2019 and for the three months ended August 31, 2018 were excluded from the computation of diluted earnings per share because we reported a net loss for each of these periods and the effect of inclusion would be antidilutive.

We have the option to pay cash, issue shares of common stock or any combination thereof for the aggregate amount due upon conversion of the Notes. It is our intent to settle the principal amount of the convertible senior notes with cash, and therefore, we use the treasury stock method for calculating any potential dilutive effect of the conversion option on diluted earnings (loss) per share. From the time of the issuance of the Notes, the average market price of our common stock has been less than the 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 12 – STOCKHOLDERS’ EQUITY

Stock Repurchase

On December 10, 2018, our Board of Directors authorized a new share repurchase program under which we may repurchase up to $20.0 million of our outstanding common stock over the next 12 months, of which $10.0 million was utilized as of February 28, 2019. Under the stock repurchase program, we may repurchase shares in the open market. There were no stock repurchases during the six months ended August 31, 2019.

Employee Stock Purchase Plan

On June 7, 2018, our Board of Directors adopted the CalAmp Corp. 2018 Employee Stock Purchase Plan (the “ESPP”), which was approved by our stockholders on July 25, 2018. The ESPP provides for the issuance of 1,750,000 shares of our common stock. The first enrollment under the ESPP Plan commenced in February 2019. There are two enrollment periods each year that commence on February 1^st and August 1^st and lasts for six months. Stock-based compensation expense related to the ESPP for the three and six months ended August 31, 2019 was $0.2 million and $0.3 million, respectively.

Equity Awards

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

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
Cost of revenues	$	162	$	212	$	337	$	389
Research and development		633		420		1,046		785
Selling and marketing		982		680		1,651		1,251
General and administrative		1,406		1,368		2,692		2,722
	$	3,183	$	2,680	$	5,726	$	5,147

Changes in our outstanding stock options during the six months ended August 31, 2019 were as follows (options in thousands):

	Number of Options			Weighted Average Exercise Price		Weighted average remaining contractual life (years)		Aggregate intrinsic value
Outstanding at February 28, 2019		1,054		$	13.44		5.8
Granted		171			11.11
Exercised		(83	)		2.36
Forfeited or expired		—			—
Outstanding at August 31, 2019		1,142		$	13.90		6.3	$	1,349
Exercisable at August 31, 2019		717		$	12.20		4.8	$	1,349

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Changes in our outstanding restricted stock shares, performance stock units (“PSUs”) and restricted stock units (“RSUs”) during the six months ended August 31, 2019were as follows (restricted shares, PSUs and RSUs in thousands):

	Number of Restricted Shares, PSUs and RSUs			Weighted Average Grant Date Fair Value		Shares Retained to Cover Statutory Minimum Withholding Taxes
Outstanding at February 28, 2019		1,507		$	19.77
Granted		1,544			11.30
Vested		(441	)		18.91		150
Forfeited		(96	)		20.04
Outstanding at August 31, 2019		2,514		$	14.69

As of August 31, 2019, there was $36.4 million of total unrecognized stock-based compensation cost related to outstanding nonvested equity awards that is expected to be recognized as an expense over a weighted-average remaining vesting period of 3.3 years.

NOTE 13 – COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) consists of two components, net income (loss) and Other Comprehensive Income (Loss) (“OCI”). OCI refers to revenue, expenses, and gains and losses that under GAAP are recorded as an element of stockholders’ equity but are excluded from net income. Our OCI consists of currency translation adjustments from our foreign subsidiaries that do not use the U.S. dollar as their functional currency.

The following table shows the changes in Accumulated Other Comprehensive Income (Loss) for the six months ended August 31, 2019 (in thousands):

	Cumulative Foreign Currency Translation
Balances at February 28, 2019	$	(661	)
Other comprehensive loss, net of tax		(1,287	)
Balances at August 31, 2019	$	(1,948	)

NOTE 14 - CONCENTRATION OF RISK

Significant Customers

We sell telematics products and services to large global enterprises in the industrial equipment, transportation and automotive market verticals. One of our customers accounted for more than 10% of our total revenue and accounts receivable as follows (rounded):

	Three Months Ended August 31,						Six Months Ended August 31,
	2019			2018			2019			2018
Revenues:
Customer A		10	%		16	%		12	%		14	%

	August 31,			February 28,
	2019			2019
Accounts receivable:
Customer A		10	%		14	%

Significant Suppliers

We purchase a significant amount of our product inventory from certain manufacturers or suppliers including components, assemblies and electronic manufacturing parts. These suppliers are located in Asia, including China. The inventory is purchased under standard supply agreements that outline the terms of the product delivery. The title and risk of loss of the product passes to us upon shipment from the manufacturers’ plant or warehouse. As identified below, some of these manufacturers accounted for more than 10% of our purchases and accounts payable as follows (rounded):

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	Three Months Ended August 31,						Six Months Ended August 31,
	2019			2018			2019			2018
Inventory purchases:
Supplier A		28	%		29	%		30	%		29	%
Supplier B		13	%		21	%		13	%		21	%
Supplier C		11	%		0	%		5	%		0	%

	August 31,			February 28,
	2019			2019
Accounts payable:
Supplier A		15	%		30	%
Supplier B		12	%		18	%

We are currently reliant upon these suppliers for products. Although we believe that we can obtain products from other sources, the loss of a significant supplier could have a material impact on our financial condition and results of operations as the products that are being purchased may not be available on similar terms from another supplier.

NOTE 15 - PRODUCT WARRANTIES

All products have a one- or two-year limited warranty against manufacturing defects and workmanship. We estimate the future costs relating to product returns subject to our warranty and record a reserve upon shipment of our products. We periodically adjust our estimate for actual warranty claims and historical claims experience as well as the impact of known product operational issues. The warranty reserve is included in Other Current Liabilities in the condensed consolidated balance sheets. Activity in the accrued warranty costs liability is as follows (in thousands):

	Six Months Ended
	August 31,
	2019			2018
Balance at beginning of period	$	1,399		$	5,734
Charged to costs and expenses		1,100			558
Deductions		(700	)		(722	)
Balance at end of period	$	1,799		$	5,570

NOTE 16 – OTHER FINANCIAL INFORMATION

Supplemental Balance Sheet Information

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

	August 31,		February 28,
	2019		2019
Operating lease liabilities (see Note 9)	$	6,087	$	—
Litigation reserve		1,500		1,500
Warranty reserves		1,799		1,398
Accrued restructuring costs (see Note 8)		—		752
Other		5,939		6,972
	$	15,325	$	10,622

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

	August 31,		February 28,
	2019		2019
Deferred revenue	$	30,010	$	27,106
Deferred compensation plan liability		6,643		6,409
Accrued restructuring costs (see Note 8)		-		2,175
Deferred tax liability		1,272		963
Deferred rent		-		365
Other		1,531		1,458
	$	39,456	$	38,476

Supplemental Statement of Comprehensive Income (Loss) Information

Interest expense consists of the following (in thousands):

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
Interest expense on 2020 Convertible Notes:
Stated interest at 1.625% per annum	$	498	$	611	$	996	$	1,312
Amortization of note discount		1,327		1,515		2,620		3,228
Amortization of debt issue costs		168		176		331		394
		1,993		2,302		3,947		4,934
Interest expense on 2025 Convertible Notes:
Stated interest at 2.00% per annum		1,150		511		2,326		511
Amortization of note discount		2,012		839		4,031		839
Amortization of debt issue costs		148		62		297		62
		3,310		1,412		6,654		1,412
Other interest expense		252		53		410		86
Total interest expense	$	5,555	$	3,767	$	11,011	$	6,432

Supplemental Cash Flow Information

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

	Six Months Ended
	August 31,
	2019		2018
Interest expense paid	$	3,358	$	1,547
Income tax paid	$	466	$	738

NOTE 17 - SEGMENT INFORMATION AND GEOGRAPHIC DATA

Our business activities are organized into 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.

Our 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. Telematics Systems segment revenues consist primarily of stand-alone product sales.

Our 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. Software & Subscription Services segment revenues include SaaS, professional services, devices sold with monitoring services and amortization of deferred revenue for customized devices functional only with application subscriptions that are not sold separately.

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Segment information for the three and six months ended August 31, 2019 and 2018 is as follows (in thousands):

	Three Months Ended August 31, 2019												Three Months Ended August 31, 2018
	Operating Segments												Operating Segments
	Telematics Systems			Software & Subscription Services			Corporate Expenses			Total			Telematics Systems			Software & Subscription Services			Corporate Expenses			Total
Revenues	$	62,031		$	31,205		$	—		$	93,236		$	77,100		$	18,937		$	—		$	96,037
Gross profit	$	24,310		$	13,360		$	—		$	37,670		$	30,396		$	9,425		$	—		$	39,821
Gross margin		39	%		43	%		0	%		40	%		39	%		50	%		0	%		41	%
Adjusted EBITDA	$	7,514		$	3,947		$	(814	)	$	10,647		$	11,682		$	3,373		$	(1,366	)	$	13,689

	Six Months Ended August 31, 2019												Six Months Ended August 31, 2018
	Operating Segments												Operating Segments
	Telematics Systems			Software & Subscription Services			Corporate Expenses			Total			Telematics Systems			Software & Subscription Services			Corporate Expenses			Total
Revenues	$	125,590		$	56,716		$	—		$	182,306		$	153,452		$	37,473		$	—		$	190,925
Gross profit	$	49,321		$	23,760		$	—		$	73,081		$	59,905		$	18,007		$	—		$	77,912
Gross margin		39	%		42	%		0	%		40	%		39	%		48	%		0	%		41	%
Adjusted EBITDA	$	14,507		$	6,321		$	(2,612	)	$	18,216		$	22,496		$	6,295		$	(2,925	)	$	25,866

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.

Our CODM evaluates each segment based on earnings before interest, taxes, depreciation, amortization and certain other charges (“Adjusted EBITDA”) and we therefore consider Adjusted EBITDA to be a primary measure of operating performance of our operating segments. The adjustments to our net income (losses) prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) to calculate Adjusted EBITDA are itemized below (in thousands):

	Three Months Ended August 31,						Six Months Ended August 31,
	2019			2018			2019			2018
Net income (loss)	$	(7,369	)	$	(854	)	$	(16,062	)	$	7,657
Investment income		(1,256	)		(1,007	)		(3,337	)		(1,860	)
Interest expense		5,555			3,767			11,011			6,432
Income tax provision		(1,342	)		(497	)		(3,599	)		1,274
Depreciation		5,191			2,298			9,036			4,341
Amortization of intangible assets		3,318			2,893			6,358			5,641
Stock-based compensation		3,183			2,680			5,726			5,147
Loss on extinguishment of debt		—			2,033			—			2,033
Impairment loss and equity in net loss of affiliate		—			530			530			969
Restructuring charges		2,272			566			2,272			3,949
Non-recurring legal expenses		777			1,023			4,584			3,137
Acquisition and integration related expenses		46			—			1,190			—
Gain on LoJack battery performance legal Settlement		—			—			-			(13,333	)
Other		272			257			507			479
Adjusted EBITDA	$	10,647		$	13,689		$	18,216		$	25,866

It is not practicable for us to report identifiable assets by segment because these business units share resources, functions and facilities.

We do not have significant long-lived assets outside the United States.

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

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
United States	$	68,684	$	70,647	$	131,806	$	141,064
Europe, Middle East and Africa		13,298		13,788		26,724		27,132
Latin America		4,227		1,723		7,713		4,129
Canada		2,481		2,338		5,317		3,702
Asia and Pacific Rim		1,940		3,480		4,349		7,239
All other		2,606		4,061		6,397		7,659
	$	93,236	$	96,037	$	182,306	$	190,925

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 us. No single non-U.S. country accounted for more than 10% of our revenue in the three and six months ended August 31, 2019 and 2018.

NOTE 18 – LEGAL PROCEEDINGS

Omega patent infringement claim

As previously disclosed in our Form 10-Q for the fiscal quarter ended May 31, 2019 that was filed with the U.S. Securities and Exchange Commission on June 28, 2019, we filed motions with the court seeking judgment as a matter of law and for a new trial in response to the patent infringement law suit filed by Omega Patents, LLC (“Omega”) that was decided against us in 2016. The court denied our motions on November 14, 2017. We then appealed to the Court of Appeals for the Federal Circuit (the “Federal Circuit”). The appeal was fully briefed, and the court heard oral argument on January 9, 2019. On April 8, 2019, the Federal Circuit vacated the compensatory and enhanced damages and attorney’s fees awarded by the trial court to Omega. The Federal Circuit also set aside the jury’s verdict that our alleged infringement was willful, and remanded the case for a new trial. As a result, substantially all of the previously reserved legal provisions of $19.1 million as of November 30, 2018 was reversed as of February 28, 2019. The reversal was recorded as a reduction of general and administrative expenses in our consolidated statement of comprehensive income for the fiscal year ended February 28, 2019. The district court scheduled a new trial which commenced on September 23, 2019. We also initiated ex parte reexamination proceedings filed in the U.S. Patent and Trademark Office seeking to invalidate a number of Omega’s patents involved in the litigation. Those proceedings currently remain pending. We continue to believe that our products do not infringe on any of Omega’s patents. While it is not feasible to predict with certainty the outcome of this litigation, we believe that its ultimate resolution would not have a material adverse effect on our consolidated results of operations, financial condition and cash flows.

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 us. In particular, in the ordinary course of business, we may receive claims concerning personnel matters, contract performance, or claims that our products or services infringe the intellectual property of third parties. In connection with these matters, we may be required to enter into license agreements or other settlement arrangements that require us to make significant payments in the future. While the outcome of any such claims or litigation cannot be predicted with certainty, management does not believe that the outcome of any such matters existing at the present time would have a material adverse effect on our consolidated results of operations, financial condition and cash flows.

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

Our discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). 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 our 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 our Annual Report on Form 10-K for the fiscal year ended February 28, 2019, as filed with the U.S. Securities and Exchange Commission on May 1, 2019, and include the following areas:

• Allowance for doubtful accounts;

• Inventory write-downs;

• Product warranties;

• Patent litigation and other contingencies;

• Deferred income tax assets and uncertain tax positions;

• Impairment assessments of goodwill, purchased intangible assets and other long-lived assets;

• Impairment of equity method investments;

• Stock-based compensation expense; and

• Revenue recognition.

RESULTS OF OPERATIONS

OUR COMPANY

We are a telematics pioneer leading transformation in a mobile connected economy. We help reinvent businesses and improve lives around the globe with technology solutions that streamline complex Internet of Things (“IoT”) developments through wireless connectivity solutions and derived data intelligence. Our software applications, scalable cloud services, and intelligent devices collect and assess business-critical data from mobile assets and their contents. Our business is organized into 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 within these two segments. A description of the reportable business segments is provided below.

On February 25, 2019, we completed our acquisition of Tracker Network (UK) Limited (“Tracker UK”), a LoJack licensee and a market leader in stolen vehicle recovery (“SVR”) telematics services across the United Kingdom, for a cash purchase price of $13.1 million. On March 19, 2019, we completed the acquisition of Car Track, S.A. de C.V. (“LoJack Mexico”), the exclusive licensee of LoJack technology for the Mexican market. We purchased the remaining 87.5% of the LoJack Mexico shares that we did not own for a cash purchase price of $14.3 million. On April 12, 2019, we acquired Synovia Solutions LLC (“Synovia”), a North American market leader in fleet safety and management for K-12 school bus and state and local government fleets for a cash purchase price of $49.8 million. Combined with the recent acquisitions of Tracker UK and LoJack Mexico, the Synovia acquisition expands our fleet management and vehicle safety services portfolio and accelerates our transformation to high-value subscription-based services. See Note 2 for a description of these acquisitions.

TELEMATICS SYSTEMS

Our Telematics Systems segment offers a series of advanced telematics and SVR products for the broader connected vehicle marketplace, which enable customers to optimize their operations by collecting, monitoring and effectively reporting business-critical information and desired intelligence from high-value remote and mobile assets. Our telematics products include asset tracking units, mobile telematics devices, fixed and mobile wireless gateways, and routers. These wireless networking devices underpin a wide range of solutions, and are ideal for applications demanding secure, reliable and business-critical communications.

SOFTWARE & SUBSCRIPTION SERVICES

Our 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 Application Programming Interfaces (“APIs”) to deliver full-featured mobile IoT solutions to a wide range of customers and markets. Our scalable proprietary applications and other subscription services enable rapid and cost-effective development of high-value solutions for customers all around the globe. Our recently acquired businesses, Tracker UK, LoJack Mexico and Synovia, became components of this segment (see Note 2).

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Adjusted EBITDA

In addition to our U.S. GAAP results, we present Adjusted EBITDA as a supplemental non-GAAP measure of our performance. A non-GAAP financial measure is defined as a numerical measure of a company’s financial performance that excludes or includes amounts to be different than the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the statements of comprehensive income (loss), balance sheets or statements of cash flows. We define Adjusted EBITDA as Earnings Before Investment Income, Interest Expenses, Taxes, Depreciation, Amortization, stock-based compensation, acquisition and integration expenses, non-cash costs and expenses arising from purchase accounting adjustments, litigation provision, gain from legal settlement and certain other adjustments. Our CEO, the CODM, uses Adjusted EBITDA to evaluate and monitor segment performance. We believe this non-GAAP financial information provides additional insight into our ongoing performance and have therefore chosen to provide this information to investors for a more consistent basis of comparison to help investors evaluate our results of ongoing operations and enable more meaningful period-to-period comparisons. Pursuant to the rule and regulations of the U.S. Securities and Exchange Commission regarding the use of non-GAAP financial measures, we have provided a reconciliation of non-GAAP financial measures to the most directly comparable financial measure. See Note 17 to the accompanying condensed consolidated financial statements for additional information related to Adjusted EBITDA by reportable segments and reconciliation to net income (loss).

OPERATING RESULTS

Three months ended August 31, 2019 compared to three months ended August 31, 2018:

Revenue by Segment

	Three Months Ended August 31,
	2019					2018
(In thousands)	$		% of Revenue			$		% of Revenue			$ Change			% Change
Segment
Telematics Systems	$	62,031		66.5	%	$	77,100		80.3	%	$	(15,069	)		(19.5	%)
Software & Subscription Services		31,205		33.5	%		18,937		19.7	%		12,268			64.8	%
Total	$	93,236		100.0	%	$	96,037		100.0	%	$	(2,801	)		(2.9	%)

Telematics Systems revenue decreased by $15.1 million or 19.5% for the three months ended August 31, 2019 compared to the same period last year. The decrease was attributable to reduced sale volume in three product categories including: MRM telematics, OEM/network products and legacy LoJack SVR products. The decrease in MRM telematics products was primarily isolated to a reduction in sales volume to a few larger customers including Synovia Solutions, which we acquired in April 2019, and is now contributing to our Software and Subscription Services segment. The decrease in OEM/network products was attributable to a reduction in sales to our largest OEM/network product customer, which is in the middle of a product line transition and also commencing the rollout of the initial phase of a 3G-to-4G Long Term Evolution (“LTE”) retrofit program. We expect this decline to be temporary and to be offset by demands from our customers as the 3G network sunset becomes more imminent. Legacy LoJack SVR revenue declined due to a technology transition from proprietary radio frequency technology to GPS-based telematics solutions. We expect this decline to be offset over time by future growth in our telematics solutions, such as SureDrive and LotSmart within our Software and Subscription Services segment.

Software & Subscription Services revenue increased by $12.3 million or 64.8% for the three months ended August 31, 2019 compared to the same period last year. The increase was primarily due to the three recent acquisitions of Tracker UK, LoJack Mexico and Synovia, and coupled with growth in LoJack Italy.

Gross Profit by Segment

	Three Months Ended August 31,
	2019					2018
(In thousands)	$		% of Revenue			$		% of Revenue			$ Change			% Change
Segment
Telematics Systems	$	24,310		39.2	%	$	30,396		39.4	%	$	(6,086	)		(20.0	%)
Software & Subscription Services		13,360		42.8	%		9,425		49.8	%		3,935			41.8	%
Gross profit	$	37,670		40.4	%	$	39,821		41.5	%	$	(2,151	)		(5.4	%)

Consolidated gross profit decreased by $2.2 million or 5.4% for the three months ended August 31, 2019 compared to the same period last year. The decrease in absolute dollar terms was due to lower revenue in the Telematics Systems business partially offset by continued growth in Software & Subscription Services as described above.

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Consolidated gross margin decreased by 1.1% for the three months ended August 31, 2019compared to the same period last year. Gross margin for Telematics Systems remained consistent for the three months ended August 31, 2019 and 2018. Gross margin for Software & Subscription Services decreased to 42.8% for the three months ended August 31, 2019 from 49.8% for the same period last year. The decrease was primarily driven by the recently acquired businesses as the gross profit is impacted by purchase price adjustments to deferred revenue balances.

Cost of revenues above excludes the restructuring related costs, which is shown separately in the operating expenses in our condensed consolidation statement of comprehensive income (loss).

Operating Expenses

	Three Months Ended August 31,
	2019					2018
(In thousands)	$		% of Revenue			$		% of Revenue			$ Change		% Change
Research and development	$	7,924		8.5	%	$	7,599		7.9	%	$	325		4.3	%
Selling and marketing		15,868		17.0	%		12,523		13.0	%		3,345		26.7	%
General and administrative		12,893		13.8	%		11,991		12.5	%		902		7.5	%
Restructuring		2,272		2.4	%		566		0.6	%		1,706		301.4	%
Intangible asset amortization		3,318		3.6	%		2,893		3.0	%		425		14.7	%
Total	$	42,275		45.3	%	$	35,572		37.0	%	$	6,703		18.8	%

Consolidated research and development expense increased by $0.3 million or 4.3% for the three months ended August 31, 2019 compared to the same period last year. We will continue to invest in research and development of new products and technologies to be sold through the U.S. and international sales channels.

Consolidated selling and marketing expense increased by $3.3 million or 26.7% for the three months ended August 31, 2019 compared to the same period last year. The increase was primarily driven by additional compensation expenses related to an increase in headcount due to the acquired businesses.

Consolidated general and administrative expenses increased by $0.9 million or 7.5% for the three months ended August 31, 2019 compared to the same period last year. The increase was primarily driven by additional compensation expenses related to an increase in headcount due to acquired businesses and partially offset by decreases in professional fees related to certain non-recurring legal matters. We began partial operations on our new Enterprise Resource Planning (“ERP”) system in June 2019, which also resulted in increased general and administrative expenses. Certain implementation costs on our new ERP system were capitalized as Property and Equipment in our condensed consolidated balance sheets.

As described in Note 8 to the accompanying condensed consolidated financial statements, during the three months ended May 31, 2018, we commenced a plan to capture certain synergies and cost savings related to streamlining our global operations and sales organization as well as rationalize certain leased properties that are partially vacant. We incurred additional charges for this initiative during the three months ended August 31, 2019. Restructuring costs are shown separately in the operating expenses in our condensed consolidated statement of comprehensive income (loss).

Amortization of intangibles increased by $0.4 million or 14.7% for the three months ended August 31, 2019 compared to the same period last year due to addition of intangible assets resulting from recent business acquisitions.

Non-operating Income (Expense), Net

Investment income increased by $0.2 million to $1.3 million for the three months ended August 31, 2019 from $1.0 million for the three months ended August 31, 2018. The increase was primarily due to an increase in investment income on short-term marketable securities held during the period.

Interest expense increased by $1.8 million to $5.6 million for the three months ended August 31, 2019 from $3.8 million for the three months ended August 31, 2018 primarily due to additional interest and amortization of debt discount and issue costs related to the 2025 Convertible Notes issued in July 2018.

During the three months ended August 31, 2018, we recognized a loss of $2.0 million on extinguishment of debt on the repurchase of $53.8 million of our 2020 Convertible Notes in July 2018.

Other non-operating income for the three months ended August 31, 2019 was $0.1 million, as compared to a loss of $0.3 million for the comparable period of the prior year due to a favorable shift in foreign currency exchange rates.

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Overall Profitability Measures

Net Income (Loss):

GAAP-basis net loss in the three months ended August 31, 2019 was $7.4 million as compared to a net loss of $0.9 million in the three months ended August 31, 2018. The $8.3 million decrease is due to the operating loss resulting from a decline in revenue and increase in operating expenses during the quarter due to recent acquisitions as described above.

Adjusted EBITDA:

	Three Months Ended August 31,
(In thousands)	2019			2018			$ Change			% Change
Segment
Telematics Systems	$	7,514		$	11,682		$	(4,168	)		(35.7	%)
Software & Subscription Services		3,947			3,373			574			17.0	%
Corporate Expenses		(814	)		(1,366	)		552			(40.4	%)
Total Adjusted EBITDA	$	10,647		$	13,689		$	(3,042	)		(22.2	%)

Adjusted EBITDA for Telematics Systems in the three months ended August 31, 2019 decreased by $4.2 million compared to the same period last year primarily due to a decline in revenue resulting from decreased sales volume and acquisition of Synovia Solutions as described above. Adjusted EBITDA for Software & Subscription Services increased by $0.6 million compared to the same period last year primarily due to higher gross profit and partially offset by higher operating expenses as a result of the recently acquired businesses described above. Adjusted EBITDA for Corporate Expenses decreased due to lower legal expenses.

See Note 17 for information related to Adjusted EBITDA by reportable segments and a reconciliation to GAAP-basis net income (loss).

Six months ended August 31, 2019 compared to six months ended August 31, 2018:

Revenue by Segment

	Six Months Ended August 31,
	2019					2018
(In thousands)	$		% of Revenue			$		% of Revenue			$ Change			% Change
Segment
Telematics Systems	$	125,590		68.9	%	$	153,452		80.4	%	$	(27,862	)		(18.2	%)
Software & Subscription Services		56,716		31.1	%		37,473		19.6	%		19,243			51.4	%
Total	$	182,306		100.0	%	$	190,925		100.0	%	$	(8,619	)		(4.5	%)

Telematics Systems revenue decreased by $27.9 million or 18.2% for the six months ended August 31, 2019 compared to the same period last year. The decrease was attributable to reduced sale volume in three product categories including MRM telematics, OEM/network products and legacy LoJack SVR products. The decrease in MRM telematics products was primarily isolated to a reduction in sales volume to a few larger customers including Synovia Solutions, which we acquired in in April 2019, and is now contributing to our Software and Subscription Services segment. The decrease in OEM/network products was attributable to a reduction in sales to our largest OEM/network products customer which is in the middle of a product line transition and also commencing the rollout of the initial phase of a 3G-to-4G LTE retrofit program. We expect this decline to be temporary and to be offset by demands from our customers as the 3G network sunset becomes more imminent. Legacy LoJack SVR revenue continued its secular decline due to a technology transition from proprietary radio frequency technology to GPS-based telematics solutions. We expect this decline to be offset over time by future growth in our telematics solutions, such as SureDrive and LotSmart within our Software and Subscription Services segment.

Software & Subscription Services revenue increased by $19.2 million or 51.4% for the six months ended August 31, 2019 compared to the same period last year. The increase was due primarily to the three recent acquisitions of Tracker UK, LoJack Mexico and Synovia, and coupled with growth in LoJack Italy.

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Gross Profit by Segment

	Six Months Ended August 31,
	2019					2018
(In thousands)	$		% of Revenue			$		% of Revenue			$ Change			% Change
Segment
Telematics Systems	$	49,321		39.3	%	$	59,905		39.0	%	$	(10,584	)		(17.7	%)
Software & Subscription Services		23,760		41.9	%		18,007		48.1	%		5,753			31.9	%
Gross profit	$	73,081		40.1	%	$	77,912		40.8	%	$	(4,831	)		(6.2	%)

Consolidated gross profit decreased by $4.8 million or 6.2% for the six months ended August 31, 2019 compared to the same period last year. The decrease in absolute dollar terms was due to lower revenue in the Telematics Systems business partially offset by continued growth in Software & Subscription Services as described above.

Consolidated gross margin decreased to 40.1% for the six months ended August 31, 2019 from 40.8% for the same period last year, which was primarily attributable to a decrease in gross margin for Software & Subscription Services. Gross margin for Software & Subscription Services decreased to 41.9% for the six months ended August 31, 2019 from 48.1% for the same period last year. The decrease was primarily driven by the recently acquired businesses, as gross profit is impacted by purchase price adjustments to deferred revenue balances.

Cost of revenues above excludes the restructuring related costs, which is shown separately in the operating expenses in our condensed consolidation statement of comprehensive income (loss).

Operating Expenses

	Six Months Ended August 31,
	2019					2018
(In thousands)	$		% of Revenue			$		% of Revenue			$ Change			% Change
Research and development	$	14,810		8.1	%	$	14,200		7.4	%	$	610			4.3	%
Selling and marketing		30,515		16.7	%		25,020		13.1	%		5,495			22.0	%
General and administrative		30,377		16.7	%		25,427		13.3	%		4,950			19.5	%
Restructuring		2,272		1.2	%		3,949		2.1	%		(1,677	)		(42.5	%)
Intangible asset amortization		6,358		3.5	%		5,641		3.0	%		717			12.7	%
Total	$	84,332		46.2	%	$	74,237		38.9	%	$	10,095			13.6	%

Consolidated research and development expense increased by $0.6 million or 4.3% for the six months ended August 31, 2019 compared to the same period last year. The increase was primarily driven by additional compensation expenses related to an increase in headcount due to acquired businesses. We will continue to invest in research and development of new products and technologies to be sold through the U.S. and international sales channels.

Consolidated selling and marketing expense increased by $5.5 million or 22.0% for the six months ended August 31, 2019 compared to the same period last year. The increase was primarily driven by additional compensation expenses related to an increase in headcount due to the acquired businesses.

Consolidated general and administrative expenses increased by $5.0 million or 19.5% for the six months ended August 31, 2019 compared to the same period last year. The increase was primarily driven by additional compensation expenses related to an increase in headcount due to acquired businesses and increases in legal and professional fees related to the acquisitions and certain non-recurring legal matters. We began partial operations on the new ERP system in June 2019, which resulted in increased general and administrative expenses. Certain implementation costs on our new ERP system were capitalized as Property and Equipment in our condensed consolidated balance sheets.

As described in Note 8 to the accompanying condensed consolidated financial statements, during the six months ended August 31, 2019, we incurred an additional $2.3 million restructuring costs related to the cost savings plan that commenced in May 2018. Total restructuring costs decreased $1.7 million or 42.5%. for the six months ended August 31, 2019 compared to the same period last year. The decrease was attributable to lower restructuring costs related to vacant office and manufacturing plant facilities. For the six months ended August 31, 2018, we partially vacated these facilities and recorded a cost of $2.7 million. During the six months ended August 31, 2019, we fully vacated certain offices, which resulted in a cost of $1.2 million. Restructuring costs are shown separately in the operating expenses in our condensed consolidated statement of comprehensive income (loss).

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Amortization of intangibles increased by $0.7 million or 12.7% for the six months ended August 31, 2019 compared to the same period last year due to the addition of intangible assets resulting from recent business acquisitions.

Non-operating Income (Expense), Net

Investment income increased by $1.4 million to $3.3 million for the six months ended August 31, 2019 from $1.9 million for the six months ended August 31, 2018. The increase was due to dividend income we received from LoJack Mexico and a gain as further discussed in Note 2 from fair value adjustment of our previously held interest in LoJack Mexico.

Interest expense increased to $11.0 million for the six months ended August 31, 2019 from $6.4 million for the six months ended August 31, 2018 primarily due to additional interest and amortization of debt discount and issue costs related to the 2025 Convertible Notes issued in July 2018.

During the six months ended August 31, 2018, we recognized a $13.3 million gain from the legal settlement with a former supplier of LoJack. The final payment on the legal settlement was received in February 2019.

During the six months ended August 31, 2018, we recognized a loss of $2.0 million on extinguishment of debt on the repurchase of $53.8 million of our 2020 Convertible Notes in July 2018.

Other non-operating expense for the six months ended August 31, 2019 was $0.2 million, decreased from $0.5 million for the comparable period of the prior year due to an favorable shift in foreign currency exchange rates.

Overall Profitability Measures

Net Income (Loss):

GAAP-basis net loss in the six months ended August 31, 2019 was $16.1 million as compared to a net income of $7.7 million in the six months ended August 31, 2018. The $23.7 million decrease in income is due to the operating loss resulting from a decline in revenue and increase in operating expenses during the year as described above, coupled with a $13.3 million decrease in non-operating gain from a legal settlement that was fully recognized in fiscal 2019, partially offset by a $2.0 million loss on extinguishment of debt recognized in fiscal 2019.

Adjusted EBITDA:

	Six Months Ended August 31,
(In thousands)	2019			2018			$ Change			% Change
Segment
Telematics Systems	$	14,507		$	22,496		$	(7,989	)		(35.5	%)
Software & Subscription Services		6,321			6,295			26			0.4	%
Corporate Expenses		(2,612	)		(2,925	)		313			(10.7	%)
Total Adjusted EBITDA	$	18,216		$	25,866		$	(7,650	)		(29.6	%)

Adjusted EBITDA for Telematics Systems in the six months ended August 31, 2019 decreased by $8.0 million or 35.5% compared to the same period last year primarily due to a decline in revenue resulting from decreased sales volume and acquisition of a customer as described above. Adjusted EBITDA for Software & Subscription Services remained consistent for the six months ended August 31, 2019 compared to the same period last year.

See Note 17 for information related to Adjusted EBITDA by reportable segments and a reconciliation to GAAP-basis net income (loss).

Income Tax Provision

We evaluate our estimated annual effective tax rate (“ETR”) on a quarterly basis based on current and forecasted operating results. The relationship between our income tax provision or benefit and our 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 jurisdictional income or loss that is taxed at different rates. Consequently, our ETR may fluctuate significantly period to period and may make quarterly comparisons less than meaningful.

An income tax benefit of $3.6 million was recorded for the six months ended August 31, 2019, compared to an income tax provision of $1.3 million in the same period last year. The change was primarily driven by a lower pre-tax income and a reversal of a valuation allowance against foreign tax credits, partially offset by a one-time discrete tax charge related to net shortfalls and a restructuring of foreign operations during the six months ended August 31, 2019. Our effective tax rate was 18.8% and 12.9% for the six months ended August 31, 2019 and 2018, respectively.

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LIQUIDITY AND CAPITAL RESOURCES

Consistent with fiscal 2019, our primary recurring cash needs have been for working capital purposes and capital expenditures. We have historically funded our principal business activities through cash flows generated from operations. As we continue to grow our customer base and increase our revenues, there will be a need for working capital in the future. Our immediate sources of liquidity are cash, cash equivalents, marketable securities and our revolving credit facility. As of August 31, 2019, we have $201.5 million of cash, cash equivalents and marketable securities and $50 million available under our revolving credit facility. We expect to continue to finance our operations with cash generated from operations and potential borrowing under our revolving credit facility over the next twelve months, and to settle the 2020 Convertible Notes due May 2020 with cash.

On March 30, 2018, we entered into a revolving credit facility with J.P. Morgan Chase Bank, N.A. that provides for borrowings of up to $50.0 million. This revolving credit facility expires on March 30, 2020. At our election, the Borrowings under this revolving credit facility bear interest at either a LIBOR-based variable rate plus an applicable margin, or at the greater of the Prime Rate, the NYFRB Rate plus an applicable margin rate and a one-month LIBOR-based variable rate plus an applicable margin rate (each as defined in the Credit Agreement), in each case determined based on our senior leverage ratio from time to time. This revolving credit facility contains financial covenants that require us to maintain a minimum level of earnings before interest, income taxes, depreciation, amortization and other noncash charges (EBITDA) and minimum debt coverage ratios. There were no borrowings outstanding on this revolving credit facility at August 31, 2019.

As described in Note 2 to the accompanying consolidated financial statements, in February 2019, we acquired Tracker UK for $13.1 million. In March 2019, we completed the acquisition of 87.5% LoJack Mexico shares for $14.3 million. In April 2019, we acquired Synovia for $49.8 million. We funded these acquisitions from cash on hand. As part of the Synovia acquisition, we assumed the rights and obligations from the Synovia revenue assignments as described in Note 7. The revenues recognized from this arrangement of $3.1 million were considered a non-cash financing activity for the six months ended August 31, 2019.

We are a defendant in various legal proceedings, including the Omega patent infringement claim, involving intellectual property claims and contract disputes in which the final resolutions have not been determined at this time. In connection with these matters, we may be required to enter into license agreements or other settlement arrangements that require us to make significant payments in the future. While it is not feasible to predict with certainty the outcome of these legal proceedings, based on currently available information, we believe that the ultimate resolution of these matters would not have a material adverse effect on our consolidated results of operations, financial condition and cash flows.

See Note 18, Legal Proceedings, of the Notes to Unaudited Condensed Consolidated Financial Statements for additional information on legal proceedings.

Cash flows from operating activities

Cash flows from operating activities consist of net income (loss) adjusted for certain non-cash items, including depreciation, intangible asset amortization, stock-based compensation expense, amortization of discount and debt issue costs, deferred income taxes, impairment loss and equity in net loss of affiliate, and the effect of changes in components of working capital.

Our cash flow from operating activities are attributable to our net income (loss) as well as how well we manage our working capital, which is dictated by the volume of products we purchase from our manufacturers or suppliers and then sell to our customers along with the payment and collection terms that we negotiate with them.

We purchase a majority of our products from significant suppliers located in Asia, primarily in China, that generally provide us 60-day payment terms for products purchased. We are currently reliant upon these suppliers for products. Although we believe that we can obtain products from other sources, the loss of a significant supplier could have a material impact on our financial condition and results of operations as the products that are being purchased may not be available on similar terms from another supplier.

Our significant customers are located in the United States and certain foreign countries. We believe that our relationships with our key customers are very good and that these customers are in good financial condition. We generally grant credit to our customers based on their financial viability and our historical collection experience with them. We typically require payment from them within 30 to 45 days of our invoice date.

For the six months ended August 31, 2019, net cash used in operating activities was $0.4 million and net loss was $16.1 million. Our non-cash expenses, comprised principally of depreciation, intangible asset amortization, stock-based compensation expense, amortization of debt discount and issue costs, and deferred income taxes totaled $30.6 million. These non-cash expenses are partially offset by non-cash revenues of $3.1 million related to the Synovia revenue assignment arrangements. Changes in operating assets and liabilities, net of the effects of our acquisitions, resulted in a $11.8 million cash outflow, primarily driven by changes in working capital including an increase in inventory and decrease in accounts payable, but partially offset by a decrease in accounts receivable.  

34

For the six months ended August 31, 2018, net cash provided by operating activities was $36.8 million. Net income was $7.7 million, which was primarily attributable to a $13.3 million net gain from a legal Settlement with a former supplier of LoJack that was realized as non-operating income during the period.Our non-cash expenses, comprised principally of depreciation, intangible assets amortization, stock-based compensation expense, amortization of convertible debt issue costs and discount, loss on extinguishment of debt, deferred income taxes and equity in net loss of affiliate was a $22.5 million. Changes in operating assets and liabilities represented a $5.8 million source of cash, primarily driven by changes in working capital including an increase in deferred revenue and prepaid expenses but partially offset by a decrease in inventory.

Cash flow from investing activities

For the six months ended August 31, 2019 and 2018, our net cash used in investing activities was $62.2 million and $14.4 million, respectively. In each of these periods, our primary investing activities consisted of the purchase and sale of marketable securities in accordance with our corporate investment policy, as well as capital expenditures. During the six months ended August 31, 2019, we also acquired Synovia and LoJack Mexico for $48.9 million and $12.7 million, net of cash acquired, respectively.

We expect that we will make additional capital expenditures in the future, including the further build-out of our corporate offices and IT infrastructure, and the devices that we lease to customers on the Synovia subscription agreements. All of these will be done to support the future growth of our business.

Cash flow from financing activities

For the six months ended August 31, 2019 and 2018, our net cash (used in) or provided by financing activities was $(0.7) million and $119.2 million, respectively. In each of these periods, we have payments for taxes related to the net share settlement of vested equity awards and the proceeds from the exercise of stock options and contributions to ESPP. During the six months ended August 31, 2018, we had a net cash inflow of $201.5 million from the issuance of 2025 Convertible Notes, partially offset by net cash outflow of $50.6 million for the repurchase of the 2020 Convertible Notes and $28.6 million repurchase of our common stock.     

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of the U.S. Securities and Exchange Commission Regulation S-K.

Contractual Cash Obligations

During the second quarter of fiscal 2020, there were no significant changes to our estimates of future payments under our fixed contractual obligations and commitments as presented in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for our fiscal year ended February 28, 2019 as filed with the Securities and Exchange Commission on May 1, 2019.

FORWARD LOOKING STATEMENTS

Forward looking statements in this Form 10-Q which include, without limitation, statements relating to our 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 our current views with respect to future events and financial performance and are subject to certain risks and uncertainties that are difficult to predict, including, without limitation, product demand, competitive pressures and pricing declines in our 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 phased implementation of our ERP system, the effect of tariffs on exports from China, and other countries, and other risks and uncertainties that are set forth in Part I, Item 1A of the Annual Report on Form 10-K for the fiscal year ended February 28, 2019 as filed with the U.S. Securities and Exchange Commission on May 1, 2019. Such risks and uncertainties could cause actual results to differ materially from historical or anticipated results. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

35

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk

We have international operations, giving rise to exposure to market risks from changes in currency exchange rates. A cumulative foreign currency translation loss of $1.9 million related to our foreign subsidiaries is included in “Accumulated other comprehensive loss” in the Stockholders' Equity section of the condensed consolidated balance sheet at August 31, 2019. The aggregate foreign currency transaction exchange rate loss included in determining loss before income taxes and impairment loss and equity in net loss of affiliate were $0.3 million and $0.2 million in the six months ended August 31, 2019 and 2018, respectively.

As our international operations grow, our risks associated with fluctuation in foreign currency rates will become greater, and we will continue to reassess our approach to managing this risk. In addition, currency fluctuations or a weakening U.S. dollar could increase the costs of our international expansion and operation.

Interest Rate Risk

Our exposure to market rate risk for changes in interest rates relates primarily to our investment portfolio. The primary objective of our investment activities is to preserve principal and liquidity while at the same time maximizing yields without significantly increasing risk. To achieve this objective, we maintain our investment portfolio 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, we may suffer losses in principal if we need the funds prior to maturity and we choose to sell securities that have declined in market value due to changes in interest rates or perceived credit risk related to the securities’ issuers.

As the majority of our investment portfolio has a short-term nature, we do not believe an immediate increase or decrease in interest rate would have a material effect on the fair market value of our portfolio, and therefore, we do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.

We do not believe our cash equivalents and short-term marketable securities have significant risk of default or illiquidity. However, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value. In addition, we maintain significant amounts of cash and cash equivalents at one or more financial institutions that are in excess of federally insured limits. We cannot be assured that we will not experience losses on these deposits.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our 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, as amended (the “Exchange Act”)) as of the end of the period covered by this report, that our 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 U.S. Securities and Exchange Commission.

Changes in Internal Control Over Financial Reporting

In connection with our initiative to integrate and enhance our global information technology systems and business processes, we initiated the phased implementation of a new ERP system. The ERP system is being implemented in phases throughout fiscal 2020 and continuing into fiscal 2021. The first phase was completed during the second quarter of fiscal 2020. As a result of this implementation, we modified certain existing internal controls over financial reporting as well as implemented new controls and procedures related to the new ERP system. Other than the continued implementation of our ERP system, there were no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d 15(f) under the Exchange Act) that occurred during the second quarter of fiscal 2020 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

36

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 18, Legal Proceedings, of the Notes to Unaudited Condensed Consolidated Financial Statements above for information regarding the legal proceedings in which we are involved.

ITEM 1A. RISK FACTORS

The reader is referred to Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended February 28, 2019, as filed with the U.S. Securities and Exchange Commission on May 1, 2019, for a discussion of factors that could materially affect our business, financial condition, results of operations, or future results in addition to the risk factors below:

Ongoing changes to U.S. tax, tariff and import/export regulations may have a negative effect on global economic conditions, financial markets and our business.

We import certain products and components from suppliers in China. In 2018, the Office of the U.S. Trade Representative (the “USTR”) enacted tariffs on imports into the U.S. from China. In September 2018, the USTR enacted another tariff on the import of other Chinese products with an additional combined import value of approximately $250 billion. On August 28, 2019, the USTR issued a notice increasing the rate of additional duty from 10% to 15% on the $300 billion worth of certain articles, and the first tranche of those duties went into effect at the 15% rate on September 1, 2019. The second tranche of those duties is scheduled to go into effect on December 15, 2019. The USTR issued a notice requesting public comments on the proposal to increase the rate of additional duty from 25% to 30% on the $250 billion worth of other articles. Any increase in the duty rate is proposed to go into effect October 1, 2019. Although some of the products and components we import are included on this list, at this time, we do not expect these tariffs to have a material impact on our business, financial condition or results of operations. However, it is possible that further tariffs may be imposed on imports of our products, or that our business will be impacted by retaliatory trade measures taken by China or other countries in response to existing or future tariffs, causing us to raise prices or make changes to our operations, any of which could have a negative impact on our revenue or operating results.

Additionally, the announcement of the Referendum of the U.K.’s Membership of the European Union (referred to as Brexit), advising for the exit of the U.K. from the European Union, could cause disruptions to and create uncertainty surrounding our business, particularly given our recent efforts to expand our business throughout Europe through our acquisition of Tracker UK. Brexit could affect our relationships with our existing and future customers, suppliers and employees, which could in turn have an adverse effect on our business, financial results and operations.

We may experience significant disruptions in our operations resulting from our enterprise resource planning system initiatives.

We depend on our information technology systems for the efficient functioning of our global business, including accounting, billing, data storage, purchasing and inventory management. In order to integrate and enhance our global operations, we initiated the phased implementation of an ERP system across our global operating locations to support our operations. The implementation of this ERP system required, and will continue to require, the investment of human and financial resources. We have incurred and expect to incur additional expenses as we continue to implement, enhance and develop our ERP system. As a result of our ERP initiatives, we may encounter difficulties in operating our business, which could disrupt our operations, including our ability to timely ship and track customer orders, determine inventory requirements, manage our supply chain, manage customer billing and adequately service our customers. If we experience significant disruptions resulting from our ERP initiatives, our business and operations could be disrupted, including our ability to report accurate and timely financial results. Accordingly, such events may disrupt or reduce the efficiency of our global operations and have a material adverse effect on our operating results and cash flows.

37

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

38

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 26, 2019	/s/ Kurtis Binder
Date	EVP & Chief Financial Officer
	(Principal Financial Officer and Chief Accounting Officer)

39

EX-31.1

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 26, 2019	/s/ Michael Burdiek
Date	Michael Burdiek
	Chief Executive Officer

EX-31.2

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, Kurtis Binder, 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 26, 2019	/s/ Kurtis Binder
Date	Kurtis Binder
	Chief Financial Officer

EX-32

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, 2019 as filed with the Securities and Exchange Commission (the "Report"), we, Michael Burdiek, Chief Executive Officer of the Company, and Kurtis Binder, 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/ Kurtis Binder

Kurtis Binder

Chief Financial Officer

September 26, 2019

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.

XML

LEGAL PROCEEDINGS (Legal Proceedings) (Details) $ in Millions	Nov. 30, 2018 USD ($)
Commitments And Contingencies Disclosure [Abstract]
Legal provision previously reserved	$ 19.1

XML

PRODUCT WARRANTIES - Activity in Accrued Warranty Costs Liability (Details) - Warranty Reserves [Member] - USD ($) $ in Thousands	6 Months Ended
	Aug. 31, 2019	Aug. 31, 2018
Valuation And Qualifying Accounts Disclosure [Line Items]
Balance at beginning of period	$ 1,399	$ 5,734
Charged to costs and expenses	1,100	558
Deductions	(700)	(722)
Balance at end of period	$ 1,799	$ 5,570

XML

COMPREHENSIVE INCOME (LOSS) (Schedule of Changes in Accumulated Other Comprehensive Income (Loss) (Details) $ in Thousands	6 Months Ended
	Aug. 31, 2019 USD ($)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balances	$ (661)
Balances	(1,948)
Cumulative Foreign Currency Translation [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balances	(661)
Other comprehensive loss, net of tax	(1,287)
Balances	$ (1,948)

XML

SEGMENT INFORMATION AND GEOGRAPHIC DATA (Narrative) (Details)	6 Months Ended
	Aug. 31, 2019 Segment
Segment Reporting [Abstract]
Number of reportable segments	2

XML

OTHER FINANCIAL INFORMATION (Schedule of Other Non-Current Liabilities) (Details) - USD ($) $ in Thousands	Aug. 31, 2019	Feb. 28, 2019
Other Financial Information [Abstract]
Deferred revenue	$ 30,010	$ 27,106
Deferred compensation plan liability	6,643	6,409
Accrued restructuring costs (see Note 8)		2,175
Deferred tax liability	1,272	963
Deferred rent		365
Other	1,531	1,458
Total other non-current liabilities	$ 39,456	$ 38,476

XML

STOCKHOLDERS' EQUITY (Narrative) (Details) - USD ($)				3 Months Ended		6 Months Ended
	Feb. 28, 2019	Dec. 10, 2018	Jun. 07, 2018	Aug. 31, 2019	Aug. 31, 2018	Aug. 31, 2019	Aug. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program, authorized amount		$ 20,000,000		$ 0		$ 0
Share repurchase program period		12 months
Stock repurchase program, utilized amount	$ 10,000,000
Issuance of common stock under ESPP			1,750,000
Stock-based compensation expense				3,183,000	$ 2,680,000	5,726,000	$ 5,147,000
Unrecognized share-based compensation cost				36,400,000		$ 36,400,000
Unrecognized compensation cost, recognition period						3 years 3 months 18 days
Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense				$ 200,000		$ 300,000

XML

GOODWILL AND OTHER INTANGIBLE ASSETS (Schedule of Goodwill) (Details) $ in Thousands	6 Months Ended
	Aug. 31, 2019 USD ($)
Goodwill [Line Items]
Balance as of February 28, 2019	$ 80,805
Acquisition of Synovia and LoJack Mexico (Note 2)	23,848
Effect of exchange rate change on goodwill	(564)
Other	(52)
Balance as of August 31, 2019	104,037
Telematics Systems [Member]
Goodwill [Line Items]
Balance as of February 28, 2019	51,203
Balance as of August 31, 2019	51,203
Software & Subscription Services [Member]
Goodwill [Line Items]
Balance as of February 28, 2019	29,602
Acquisition of Synovia and LoJack Mexico (Note 2)	23,848
Effect of exchange rate change on goodwill	(564)
Other	(52)
Balance as of August 31, 2019	$ 52,834

XML

FINANCING ARRANGEMENTS (Details)				1 Months Ended			3 Months Ended		6 Months Ended
	Jul. 20, 2018 USD ($)	Mar. 30, 2018 USD ($)	Apr. 30, 2015 $ / shares	Jul. 31, 2018 USD ($) shares	May 31, 2016 USD ($) shares	May 31, 2015 USD ($) shares	Aug. 31, 2019 USD ($)	Aug. 31, 2018 USD ($)	Aug. 31, 2019 USD ($) Note	Aug. 31, 2018 USD ($)	Apr. 12, 2019 USD ($)
Debt Instrument [Line Items]
Loss on extinguishment of debt								$ 2,033,000		$ 2,033,000
Synovia Solutions LLC (“Synovia”) [Member]
Debt Instrument [Line Items]
Percentage of subscription contract value on sales price paid											80.00%
Fair value of debt											$ 19,700,000
Pre-tax cost of debt percentage											4.70%
Unamortized discount											$ 1,500,000
Interest expense related to debt recognized							$ 200,000		$ 300,000
Convertible Senior Unsecured Notes [Member]
Debt Instrument [Line Items]
Number of outstanding convertible senior unsecured notes | Note									2
2020 Convertible Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount							122,500,000		$ 122,500,000
Debt instrument, face amount					$ 172,500,000	$ 172,500,000
Interest rate (as a percent)						1.625%
Maturity date						May 15, 2020
Minimum percentage of aggregate principal by holders						25.00%
Percentage of repurchase price of the principal amount						100.00%
Indebtedness for excess money borrowed						$ 10,000,000
Indebtedness, entry of judgments for payment						$ 10,000,000
Debt instrument, covenant description						The 2020 Indenture contains customary terms and conditions, including that upon certain events of default occurring and continuing, either the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes, by notice to us and the Trustee, may declare 100% of the principal amount of, and accrued and unpaid interest, if any, on all the 2020 Convertible Notes then outstanding to be due and payable immediately. Such events of default include, without limitation, the default by us or any of our subsidiaries with respect to indebtedness for borrowed money in excess of $10 million and the entry of judgments for the payment of $10 million or more against us or any of our subsidiaries which are not paid, discharged or stayed within 60 days.
Maximum number of shares of common stock that could be issued, following certain corporate events that occur prior to maturity | shares						2,500,000
Number of common stock with hedge transactions | shares					6,250,000
Payments for notes hedges					$ 31,300,000
Purchase of note hedges, net of tax					$ 19,300,000
Warrants will be exercisable in equal installments									80 days
Proceeds from issuance of warrants									$ 16,000,000
Aggregate amount of notes repurchase	$ 50,000,000
Repurchases of notes including accrued interest	53,800,000
Allocated notes repurchase price	53,700,000
Notes repurchase price, fair value of liability	47,600,000						120,500,000		$ 120,500,000
Notes repurchase price, equity component	6,100,000
Carrying value of repurchased notes	45,600,000
Loss on extinguishment of debt	$ 2,000,000
Conversion rate of shares of common stock									36.2398
2020 Convertible Notes [Member] | Discount Rate [Member]
Debt Instrument [Line Items]
Market interest rate used to discount nonconvertible debt	0.0436
2020 Convertible Notes [Member] | Warrant [Member]
Debt Instrument [Line Items]
Strike price of underlie convertible notes (in dollars per share) | $ / shares			$ 39.42
Percentage of premium on sale price of common stock			100.00%
Share price (in dollars per share) | $ / shares			$ 19.71
2020 Convertible Notes [Member] | Additional Paid-in Capital [Member]
Debt Instrument [Line Items]
Proceeds from unwind of the note hedge and warrants	$ 3,100,000
2020 Convertible Notes [Member] | Maximum [Member]
Debt Instrument [Line Items]
Debt instrument, default judgment payment period						60 days
2025 Convertible Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount							230,000,000		$ 230,000,000
Debt instrument, face amount	$ 230,000,000
Interest rate (as a percent)	2.00%
Maturity date	Aug. 01, 2025
Indebtedness for excess money borrowed	$ 10,000,000
Indebtedness, entry of judgments for payment	$ 15,000,000
Debt instrument, covenant description									The 2025 Indenture contains customary terms and conditions, including that upon certain events of default occurring and continuing, either the Trustee, by notice to us, or the holders of at least 25% in aggregate principal amount of the then outstanding Notes, by notice to us and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the 2025 Convertible Notes then outstanding to become due and payable immediately. Such events of default include, without limitation, the default by us or any of our subsidiaries with respect to indebtedness for borrowed money in excess of $10 million and the entry of judgments for the payment of $15 million or more against us or any of our subsidiaries, which are not paid, discharged or stayed within 60 days.
Number of common stock with hedge transactions | shares				7,480,000
Payments for notes hedges				$ 21,200,000
Purchase of note hedges, net of tax				$ 15,900,000
Notes repurchase price, fair value of liability							183,100,000		$ 183,100,000
Debt instrument, redemption, description									We may redeem the Notes at our option at any time on or after August 6, 2022 at a cash redemption price equal to the principal amount plus accrued interest, but only if the last reported sale price per share of our stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice.
Conversion rate of shares of common stock				41.3875					32.5256
2025 Convertible Notes [Member] | Maximum [Member]
Debt Instrument [Line Items]
Debt instrument, default judgment payment period	60 days
Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 50,000,000
Maturity date		Mar. 30, 2020
Borrowings outstanding							$ 0		$ 0

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Document and Entity Information - shares	6 Months Ended
	Aug. 31, 2019	Sep. 23, 2019
Cover [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, 2019
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2020
Entity File Number	0-12182
Entity Tax Identification Number	95-3647070
Entity Address, Address Line One	15635 Alton Parkway
Entity Address, Address Line Two	Suite 250
Entity Address, City or Town	Irvine
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92618
City Area Code	(949)
Local Phone Number	600-5600
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		34,120,256
Entity Incorporation, State or Country Code	DE
Security Exchange Name	NASDAQ
Title of 12(b) Security	Common stock, $0.01 per share
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes

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STOCKHOLDERS' EQUITY (Tables)

6 Months Ended

Aug. 31, 2019

Equity [Abstract]

Schedule of Stock-based Compensation Expense

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

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
Cost of revenues	$	162	$	212	$	337	$	389
Research and development		633		420		1,046		785
Selling and marketing		982		680		1,651		1,251
General and administrative		1,406		1,368		2,692		2,722
	$	3,183	$	2,680	$	5,726	$	5,147

Summary of Stock Option Activity

Changes in our outstanding stock options during the six months ended August 31, 2019 were as follows (options in thousands):

	Number of Options			Weighted Average Exercise Price		Weighted average remaining contractual life (years)		Aggregate intrinsic value
Outstanding at February 28, 2019		1,054		$	13.44		5.8
Granted		171			11.11
Exercised		(83	)		2.36
Forfeited or expired		—			—
Outstanding at August 31, 2019		1,142		$	13.90		6.3	$	1,349
Exercisable at August 31, 2019		717		$	12.20		4.8	$	1,349

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

Changes in our outstanding restricted stock shares, performance stock units (“PSUs”) and restricted stock units (“RSUs”) during the six months ended August 31, 2019 were as follows (restricted shares, PSUs and RSUs in thousands):

	Number of Restricted Shares, PSUs and RSUs			Weighted Average Grant Date Fair Value		Shares Retained to Cover Statutory Minimum Withholding Taxes
Outstanding at February 28, 2019		1,507		$	19.77
Granted		1,544			11.30
Vested		(441	)		18.91		150
Forfeited		(96	)		20.04
Outstanding at August 31, 2019		2,514		$	14.69

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FINANCING ARRANGEMENTS (Tables)

6 Months Ended

Aug. 31, 2019

Debt Disclosure [Abstract]

Schedule of Balances Attributable to Financing Arrangements

Balances attributable to our financing arrangements consist of the following (in thousands):

	August 31,		February 28,
	2019		2019
2020 Convertible Notes	$	118,199	$	115,249
2025 Convertible Notes		165,001		160,656
Due to Factors under revenue assignment agreements		16,897		-
		300,097		275,905
Less: Current portion		124,181		-
Long-term debt, net of current portion	$	175,916	$	275,905

Summary of Liability and Equity Components of Notes, Issuance Costs and Applicable Assumptions Used for Calculation

The table below summarizes the liability and equity components of the Notes, the issuance costs and the applicable assumptions used for the calculation (in millions except initial conversion rate and per share amounts):

	2020 Convertible Notes			2025 Convertible Notes
Initial conversion rate (shares per $1,000 principal amount)		36.2398			32.5256
Initial conversion price per share	$	27.5940		$	30.7450
Fair value of liability component upon issuance	$	138.9		$	160.8
Discount Rate		6.20	%		7.56	%
Fair value measurement level	Level 3			Level 3
Fair value of embedded equity component upon issuance	$	33.6		$	69.2
Deferred tax asset effect	$	16.0		$	17.3
Total issuance cost	$	4.3		$	7.3
Equity component	$	1.0		$	2.2
Deferred tax asset effect	$	0.4		$	0.5
Fair value of convertible notes as of August 31, 2019 (Level 2 measurement)	$	120.5		$	183.1

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Aug. 31, 2019	Aug. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ (16,062)	$ 7,657
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation expense	9,036	4,341
Intangible asset amortization	6,358	5,641
Stock-based compensation expense	5,726	5,147
Amortization of discount and debt issuance costs	7,606	4,537
Impairment of operating lease right-of-use (ROU) assets	1,210
Noncash operating lease cost	3,100
Loss on extinguishment of debt		2,033
Impairment loss on equity investment		326
Revenue assigned to factors	(3,109)
Deferred tax assets, net	(3,437)	(211)
Impairment loss and equity in net loss of affiliate	530	969
Tax benefits on vested and exercised equity awards		525
Other	456	115
Changes in operating assets and liabilities:
Accounts receivable	5,763	505
Inventories	(11,429)	4,878
Prepaid expenses and other assets	(273)	(4,879)
Accounts payable	(4,155)	743
Accrued liabilities	(2,072)	139
Deferred revenue	2,012	4,367
Operating lease liabilities	(1,640)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	(380)	36,833
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of marketable securities	27,340	32,792
Purchases of marketable securities	(17,617)	(40,312)
Capital expenditures	(10,720)	(5,770)
Acquisitions, net of cash acquired	(60,634)
Advances to affiliate	(530)	(1,063)
Other	3	(78)
NET CASH USED IN INVESTING ACTIVITIES	(62,158)	(14,431)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of 2025 Convertible Notes		230,000
Payment of debt issuance costs of 2025 Convertible Notes		(7,305)
Purchase of capped call on 2025 Convertible Notes		(21,160)
Repurchase of 2020 Convertible Notes		(53,683)
Proceeds from unwind of note hedges and warrants on 2020 Convertible Notes		3,122
Repurchases of common stock		(28,564)
Taxes paid related to net share settlement of vested equity awards	(1,729)	(3,347)
Proceeds from exercise of stock options and contributions to employee stock purchase plan (ESPP)	995	101
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	(734)	119,164
EFFECT OF EXCHANGE RATE CHANGES ON CASH	456	(197)
Net change in cash and cash equivalents	(62,816)	141,369
Cash and cash equivalents at beginning of period	256,500	132,603
Cash and cash equivalents at end of period	$ 193,684	$ 273,972

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CASH, CASH EQUIVALENTS AND INVESTMENTS

6 Months Ended

Aug. 31, 2019

Cash And Cash Equivalents [Abstract]

CASH, CASH EQUIVALENTS AND INVESTMENTS

NOTE 3 – CASH, CASH EQUIVALENTS AND INVESTMENTS

The following tables summarize our financial instrument assets (in thousands):

	As of August 31, 2019
								Balance Sheet Classification
								of Fair Value
			Unrealized					Cash and		Short-Term
	Adjusted		Gains			Fair		Cash		Marketable		Other
	Cost		(Losses)			Value		Equivalents		Securities		Assets
Cash	$	45,503	$	—		$	45,503	$	45,503	$	—	$	—
Level 1:
Money market funds		64,186		—			64,186		64,186		—		—
Mutual funds (1)		4,401		264			4,665		—		—		4,665
International equities		296		(75	)		221		—		—		221
Level 2:
Repurchase agreements		72,000		—			72,000		72,000		—		—
Corporate bonds		19,784		—			19,784		11,995		7,789		—
Total	$	206,170	$	189		$	206,359	$	193,684	$	7,789	$	4,886

	As of February 28, 2019
								Balance Sheet Classification
								of Fair Value
			Unrealized					Cash and		Short-Term
	Adjusted		Gains			Fair		Cash		Marketable		Other
	Cost		(Losses)			Value		Equivalents		Securities		Assets
Cash	$	26,084	$	—		$	26,084	$	26,084	$	—	$	—
Level 1:
Money market funds		154,428		—			154,428		154,428		—		—
Mutual funds (1)		6,023		390			6,413		—		—		6,413
International equities		296		(73	)		223		—		—		223
Level 2:
Repurchase agreements		72,000		—			72,000		72,000		—		—
Corporate bonds		21,502		(2	)		21,500		3,988		17,512		—
Total	$	280,333	$	315		$	280,648	$	256,500	$	17,512	$	6,636

(1) Amounts represent various equities, bond and money market mutual funds that are held in a “Rabbi Trust” and are restricted for payment obligations to non-qualified deferred compensation plan participants. In addition to the mutual funds above, our “Rabbi Trust” also included Corporate-Owned Life Insurance (COLI) starting in fiscal 2020. As of August 31, 2019, the cash surrender value of COLI was $2.0 million. 

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GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Aug. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 5 – GOODWILL AND OTHER INTANGIBLE ASSETS

Other intangible assets consist of the following (in thousands):

		Gross						Accumulated Amortization						Effect of Foreign Currency Translation					Net
	Useful Life	Feb. 28, 2019		Addi- tions		Aug. 31, 2019		Feb. 28, 2019		Expense		Aug. 31, 2019		Aug. 31, 2019			Feb. 28, 2019		Aug. 31, 2019		Feb. 28, 2019
Developed technology	2-7 years	$	23,603		3,800	$	27,403	$	18,253	$	1,553	$	19,806		(118	)		—	$	7,479	$	5,350
Tradenames	10 years		40,091		1,600		41,691		12,644		1,958		14,602		(164	)		—		26,925		27,447
Customer lists	4-7 years		25,304		—		25,304		21,307		840		22,147		—			—		3,157		3,997
Dealer and customer relationships	7-12 years		16,850		23,700		40,550		6,908		1,988		8,896		(303	)		—		31,351		9,942
Patents	5 years		589		—		589		160		19		179		—			—		410		429
		$	106,437	$	29,100	$	135,537	$	59,272	$	6,358	$	65,630	$	(585	)	$	-	$	69,322	$	47,165

Intangible assets with finite lives are amortized on a straight-line basis over the expected period to be benefited by future cash flows. We monitor and assess these assets for impairment on a periodic basis. Our assessment includes various new product lines and services, which leverage the existing intangible assets as well as consideration of historical and projected revenues and cash flows. As of August 31, 2019, we determined that there was no impairment of intangible assets.

Estimated future amortization expense as of August 31, 2019 is as follows (in thousands):

2020 (remainder)	$	6,559
2021		11,437
2022		9,803
2023		9,583
2024		6,523
Thereafter		25,417
	$	69,322

Changes in goodwill are as follows (in thousands):

	Telematics Systems		Software & Subscription Services			Total
Balance as of February 28, 2019	$	51,203	$	29,602		$	80,805
Acquisition of Synovia and LoJack Mexico (Note 2)		—		23,848			23,848
Effect of exchange rate change on goodwill		—		(564	)		(564	)
Other (1)		—		(52	)		(52	)
Balance as of August 31, 2019	$	51,203	$	52,834		$	104,037

(1) Amount represents adjustment to the preliminary Goodwill from the Tracker UK acquisition.  

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LEASES

6 Months Ended

Aug. 31, 2019

Leases [Abstract]

LEASES

NOTE 9 – LEASES

We have various non-cancelable operating leases for our offices in California, Texas, Massachusetts, Indiana, Minnesota and Virginia in the United States, and Italy, Mexico and the United Kingdom. We also have various non-cancelable operating leases for towers and vehicles throughout the United States, Italy and Mexico. These leases expire at various times through 2028. Certain lease agreements contain renewal options, rent abatement, and escalation clauses that are factored into our determination of lease payments when appropriate.

The table below presents lease-related assets and liabilities recorded on the condensed consolidated balance sheet (in thousands):

	Classification	August 31, 2019
Assets
Operating lease right-of-use assets	Operating lease right-of-use assets	$	27,977
Liabilities
Operating lease liabilities (current)	Other current liabilities	$	6,087
Operating lease liabilities (noncurrent)	Operating lease liabilities		29,780
Total lease liabilities		$	35,867

Lease Costs

The following lease costs were included in our condensed consolidated statements of comprehensive income (loss) as follows (in thousands):

	Three Months Ended August 31, 2019		Six Months Ended August 31, 2019
Operating lease cost	$	1,972	$	3,973
Short-term lease cost		252		564
Variable lease cost		43		73
Total lease cost	$	2,267	$	4,610

Supplemental Information

The table below presents supplemental information related to operating leases during the six months ended August 31, 2019 (in thousands, except weighted-average information):

Cash paid for amounts included in the measurement of operating lease liabilities	$	4,067
Right-of-use assets obtained in exchange for new operating lease liabilities	$	3,728
Weighted average remaining lease term	7.4 years
Weighted average discount rate		5.47	%

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheet as of August 31, 2019 (in thousands):

Remainder of 2020	$	3,853
2021		7,208
2022		6,348
2023		6,089
2024		5,728
Thereafter		15,074
Total minimum lease payments		44,300
Less imputed interest		(8,433	)
Present value of future minimum lease payments		35,867
Less current obligations under leases		(6,087	)
Long-term lease obligations	$	29,780

Disclosures Related to Periods Prior to Adoption of New Lease Standard

Minimum lease payments under operating leases with non-cancelable terms in excess of one year as of February 28, 2019, were as follows (in thousands):

2020	$	7,565
2021		6,386
2022		6,242
2023		6,199
2024		6,126
Thereafter		7,659
Total minimum lease payments	$	40,177

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COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Aug. 31, 2019

Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]

COMPREHENSIVE INCOME (LOSS)

NOTE 13 – COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) consists of two components, net income (loss) and Other Comprehensive Income (Loss) (“OCI”). OCI refers to revenue, expenses, and gains and losses that under GAAP are recorded as an element of stockholders’ equity but are excluded from net income. Our OCI consists of currency translation adjustments from our foreign subsidiaries that do not use the U.S. dollar as their functional currency.

The following table shows the changes in Accumulated Other Comprehensive Income (Loss) for the six months ended August 31, 2019 (in thousands):

	Cumulative Foreign Currency Translation
Balances at February 28, 2019	$	(661	)
Other comprehensive loss, net of tax		(1,287	)
Balances at August 31, 2019	$	(1,948	)

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SEGMENT INFORMATION AND GEOGRAPHIC DATA

6 Months Ended

Aug. 31, 2019

Segment Reporting [Abstract]

SEGMENT INFORMATION AND GEOGRAPHIC DATA

NOTE 17 - SEGMENT INFORMATION AND GEOGRAPHIC DATA

Our business activities are organized into 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.

Our 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. Telematics Systems segment revenues consist primarily of stand-alone product sales.

Our 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. Software & Subscription Services segment revenues include SaaS, professional services, devices sold with monitoring services and amortization of deferred revenue for customized devices functional only with application subscriptions that are not sold separately.

Segment information for the three and six months ended August 31, 2019 and 2018 is as follows (in thousands):

	Three Months Ended August 31, 2019												Three Months Ended August 31, 2018
	Operating Segments												Operating Segments
	Telematics Systems			Software & Subscription Services			Corporate Expenses			Total			Telematics Systems			Software & Subscription Services			Corporate Expenses			Total
Revenues	$	62,031		$	31,205		$	—		$	93,236		$	77,100		$	18,937		$	—		$	96,037
Gross profit	$	24,310		$	13,360		$	—		$	37,670		$	30,396		$	9,425		$	—		$	39,821
Gross margin		39	%		43	%		0	%		40	%		39	%		50	%		0	%		41	%
Adjusted EBITDA	$	7,514		$	3,947		$	(814	)	$	10,647		$	11,682		$	3,373		$	(1,366	)	$	13,689

	Six Months Ended August 31, 2019												Six Months Ended August 31, 2018
	Operating Segments												Operating Segments
	Telematics Systems			Software & Subscription Services			Corporate Expenses			Total			Telematics Systems			Software & Subscription Services			Corporate Expenses			Total
Revenues	$	125,590		$	56,716		$	—		$	182,306		$	153,452		$	37,473		$	—		$	190,925
Gross profit	$	49,321		$	23,760		$	—		$	73,081		$	59,905		$	18,007		$	—		$	77,912
Gross margin		39	%		42	%		0	%		40	%		39	%		48	%		0	%		41	%
Adjusted EBITDA	$	14,507		$	6,321		$	(2,612	)	$	18,216		$	22,496		$	6,295		$	(2,925	)	$	25,866

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.

Our CODM evaluates each segment based on earnings before interest, taxes, depreciation, amortization and certain other charges (“Adjusted EBITDA”) and we therefore consider Adjusted EBITDA to be a primary measure of operating performance of our operating segments. The adjustments to our net income (losses) prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) to calculate Adjusted EBITDA are itemized below (in thousands):

	Three Months Ended August 31,						Six Months Ended August 31,
	2019			2018			2019			2018
Net income (loss)	$	(7,369	)	$	(854	)	$	(16,062	)	$	7,657
Investment income		(1,256	)		(1,007	)		(3,337	)		(1,860	)
Interest expense		5,555			3,767			11,011			6,432
Income tax provision		(1,342	)		(497	)		(3,599	)		1,274
Depreciation		5,191			2,298			9,036			4,341
Amortization of intangible assets		3,318			2,893			6,358			5,641
Stock-based compensation		3,183			2,680			5,726			5,147
Loss on extinguishment of debt		—			2,033			—			2,033
Impairment loss and equity in net loss of affiliate		—			530			530			969
Restructuring charges		2,272			566			2,272			3,949
Non-recurring legal expenses		777			1,023			4,584			3,137
Acquisition and integration related expenses		46			—			1,190			—
Gain on LoJack battery performance legal Settlement		—			—			-			(13,333	)
Other		272			257			507			479
Adjusted EBITDA	$	10,647		$	13,689		$	18,216		$	25,866

It is not practicable for us to report identifiable assets by segment because these business units share resources, functions and facilities.

We do not have significant long-lived assets outside the United States.

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

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
United States	$	68,684	$	70,647	$	131,806	$	141,064
Europe, Middle East and Africa		13,298		13,788		26,724		27,132
Latin America		4,227		1,723		7,713		4,129
Canada		2,481		2,338		5,317		3,702
Asia and Pacific Rim		1,940		3,480		4,349		7,239
All other		2,606		4,061		6,397		7,659
	$	93,236	$	96,037	$	182,306	$	190,925

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 us. No single non-U.S. country accounted for more than 10% of our revenue in the three and six months ended August 31, 2019 and 2018.

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ACQUISITIONS (Tables)

6 Months Ended

Aug. 31, 2019

Business Combinations [Abstract]

Summary of Preliminary Purchase Price Allocation

The following are the preliminary purchase price allocations as of August 31, 2019 for the three acquisitions (in thousands):

	Tracker UK						LoJack Mexico						Synovia
Purchase price				$	13,097					$	14,306					$	29,500
Add debt paid at closing					-						-						20,296
Less cash acquired					(66	)					(1,586	)					(905	)
Net cash paid					13,031						12,720						48,891
Less amount released from escrow					(973	)					-						-
Net consideration					12,058						12,720						48,891
Add previously held interest					-						2,021						-
Fair value of net assets and liabilities assumed:
Current assets other than cash	$	3,549					$	4,485					$	10,354
Property and equipment		1,835						4,029						24,840
Customer relationships		2,354						7,000						16,700
Trade name		2,354						-						1,600
Developed technology		1,830						-						3,800
Deferred tax assets		-						-						2,061
Other non-current assets		104						1,301						-
Current liabilities		(3,111	)					(2,361	)					(4,468	)
Due to factors		-						-						(19,692	)
Deferred revenue		(3,162	)					(4,507	)					(4,319	)
Deferred tax liability		(963	)					(1,039	)					-
Other non-current liabilities		(201	)					-						-
Total fair value of net assets acquired					4,589						8,908						30,876
Goodwill				$	7,469					$	5,833					$	18,015

XML

RESTRUCTURING CHARGES - Summary of Activity Resulting from Implementation of Restructuring Plan within Other Current and Non-current Liabilities (Details) - USD ($) $ in Thousands	6 Months Ended	15 Months Ended
	Aug. 31, 2019	May 31, 2019
Restructuring Cost And Reserve [Line Items]
Restructuring liabilities as of February 28, 2019	$ 5,756
Cease-use liability reclassified as reduction of Operating lease right-of-use assets	(2,977)
Charges	1,063	$ 5,300
Payments	(1,314)
Restructuring liabilities as of August 31, 2019	2,528
Personnel [Member]
Restructuring Cost And Reserve [Line Items]
Restructuring liabilities as of February 28, 2019	2,779
Charges	1,063
Payments	(1,314)
Restructuring liabilities as of August 31, 2019	2,528
Facilities [Member]
Restructuring Cost And Reserve [Line Items]
Restructuring liabilities as of February 28, 2019	2,977
Cease-use liability reclassified as reduction of Operating lease right-of-use assets	$ (2,977)

XML

LEASES (Schedule of Reconciles the Undiscounted Cash Flows for Operating Lease Liabilities) (Details) $ in Thousands	Aug. 31, 2019 USD ($)
Operating Lease Liabilities Payments Due [Abstract]
Remainder of 2020	$ 3,853
2021	7,208
2022	6,348
2023	6,089
2024	5,728
Thereafter	15,074
Total minimum lease payments	44,300
Less imputed interest	(8,433)
Total lease liabilities	35,867
Less current obligations under leases	(6,087)
Long-term lease obligations	$ 29,780

XML

EARNINGS PER SHARE (Narrative) (Details) - shares	3 Months Ended		6 Months Ended
	Aug. 31, 2019	Aug. 31, 2018	Aug. 31, 2019	Aug. 31, 2018
Earnings Per Share [Abstract]
Diluted earnings per share for the conversion value of the notes	0	0	0	0

XML

ACQUISITIONS (Narrative) (Details) $ in Thousands, £ in Millions					1 Months Ended		3 Months Ended	6 Months Ended	12 Months Ended
	Apr. 12, 2019 USD ($)	Mar. 19, 2019 USD ($)	Feb. 25, 2019 USD ($)	Feb. 25, 2019 GBP (£)	Aug. 31, 2019 USD ($)	Feb. 28, 2019 USD ($)	Aug. 31, 2019 USD ($)	Aug. 31, 2019 USD ($)	Feb. 28, 2019 USD ($)
Business Acquisition [Line Items]
Purchase price, net of cash on hand								$ 60,634
Acquisition related costs							$ 46	1,190
Synovia [Member]
Business Acquisition [Line Items]
Fair value of debt	$ 19,700
Pre-tax cost of debt percentage	4.70%
Tracker UK [Member]
Business Acquisition [Line Items]
Purchase price			$ 13,100	£ 10.0				13,097
Purchase price, net of cash on hand								13,031
LoJack Mexico [Member]
Business Acquisition [Line Items]
Purchase price								14,306
Purchase price, net of cash on hand		$ 14,300			$ 1,700	$ 2,000		12,720
Percentage of shares purchase in business combination		87.50%				12.50%			12.50%
Gain on equity ownership								300
Synovia [Member]
Business Acquisition [Line Items]
Purchase price	$ 49,800							29,500
Purchase price, net of cash on hand	$ 49,800							48,891
Synovia [Member] | General and Administrative Expenses [Member]
Business Acquisition [Line Items]
Acquisition related costs								$ 1,100	$ 900

XML

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) $ in Thousands				3 Months Ended	6 Months Ended
	Apr. 12, 2019 USD ($)	Mar. 19, 2019 USD ($)	Feb. 25, 2019 USD ($)	Aug. 31, 2019 USD ($)	Aug. 31, 2019 USD ($) Segment	Mar. 01, 2019 USD ($)	Feb. 28, 2019 USD ($)
Description Of Business And Summary Of Significant Accounting Policies [Line Items]
Number of reportable segments | Segment					2
Purchase price, net of cash on hand					$ 60,634
Revenue recognized				$ 6,600	14,200
Unearned revenue				31,889	31,889	$ 51,400	$ 24,264
Contracted not recognized revenue				61,900	61,900
Allowance for doubtful accounts				3,000	3,000		$ 1,800
Operating lease right-of-use assets				27,977	27,977
Operating lease liability				35,867	35,867
ASU 2016-02
Description Of Business And Summary Of Significant Accounting Policies [Line Items]
Operating lease right-of-use assets				29,800	29,800
Operating lease liability				$ 33,200	$ 33,200
Minimum [Member]
Description Of Business And Summary Of Significant Accounting Policies [Line Items]
Estimated useful life					3 years
Accounts receivable payment period					30 days
Maximum [Member]
Description Of Business And Summary Of Significant Accounting Policies [Line Items]
Estimated useful life					5 years
Accounts receivable payment period					60 days
Vehicle Finance Vertical [Member]
Description Of Business And Summary Of Significant Accounting Policies [Line Items]
Deferred revenue contract in-service life					3 years
Fleet Management Vertical [Member]
Description Of Business And Summary Of Significant Accounting Policies [Line Items]
Deferred revenue contract in-service life					4 years
Tracker Network (UK) Limited [Member]
Description Of Business And Summary Of Significant Accounting Policies [Line Items]
Purchase price			$ 13,100
Car Track, S.A. de C.V [Member]
Description Of Business And Summary Of Significant Accounting Policies [Line Items]
Purchase price, net of cash on hand		$ 14,300
Percentage of shares purchase in business combination		87.50%
Synovia Solutions LLC (“Synovia”) [Member]
Description Of Business And Summary Of Significant Accounting Policies [Line Items]
Purchase price	$ 49,800				$ 29,500
Purchase price, net of cash on hand	$ 49,800				$ 48,891

XML

OTHER FINANCIAL INFORMATION

6 Months Ended

Aug. 31, 2019

Other Financial Information [Abstract]

OTHER FINANCIAL INFORMATION

NOTE 16 – OTHER FINANCIAL INFORMATION

Supplemental Balance Sheet Information

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

	August 31,		February 28,
	2019		2019
Operating lease liabilities (see Note 9)	$	6,087	$	—
Litigation reserve		1,500		1,500
Warranty reserves		1,799		1,398
Accrued restructuring costs (see Note 8)		—		752
Other		5,939		6,972
	$	15,325	$	10,622

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

	August 31,		February 28,
	2019		2019
Deferred revenue	$	30,010	$	27,106
Deferred compensation plan liability		6,643		6,409
Accrued restructuring costs (see Note 8)		-		2,175
Deferred tax liability		1,272		963
Deferred rent		-		365
Other		1,531		1,458
	$	39,456	$	38,476

Supplemental Statement of Comprehensive Income (Loss) Information

Interest expense consists of the following (in thousands):

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
Interest expense on 2020 Convertible Notes:
Stated interest at 1.625% per annum	$	498	$	611	$	996	$	1,312
Amortization of note discount		1,327		1,515		2,620		3,228
Amortization of debt issue costs		168		176		331		394
		1,993		2,302		3,947		4,934
Interest expense on 2025 Convertible Notes:
Stated interest at 2.00% per annum		1,150		511		2,326		511
Amortization of note discount		2,012		839		4,031		839
Amortization of debt issue costs		148		62		297		62
		3,310		1,412		6,654		1,412
Other interest expense		252		53		410		86
Total interest expense	$	5,555	$	3,767	$	11,011	$	6,432

Supplemental Cash Flow Information

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

	Six Months Ended
	August 31,
	2019		2018
Interest expense paid	$	3,358	$	1,547
Income tax paid	$	466	$	738

XML

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Aug. 31, 2019

ASU 2014-09 [Member]

Summary of Disaggregation of Revenue by Type of Goods and Services and by Timing of Revenue Recognition

We disaggregate revenue from contracts with customers into reportable segments, geography, type of goods and services and timing of revenue recognition. See Note 17 for our revenue by segment and geography. The disaggregation of revenue by type of goods and services and by timing of revenue recognition was as follows (in thousands):

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
Revenue by type of goods and services:
Telematics devices and accessories	$	65,891	$	79,145	$	134,059	$	160,281
Professional services		2,036		1,453		3,983		2,682
Recurring application subscriptions		25,309		15,439		44,264		27,962
Total	$	93,236	$	96,037	$	182,306	$	190,925

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
Revenue by timing of revenue recognition:
Revenue recognized at a point in time	$	65,891	$	79,145	$	134,059	$	160,281
Revenue recognized over time		27,345		16,892		48,247		30,644
Total	$	93,236	$	96,037	$	182,306	$	190,925

Revenues from telematics devices and accessories presented in the table above are sold on a stand-alone basis and recognized at a point in time. Recurring application subscriptions revenues include the amortization for customized devices functional only with application subscriptions.

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Aug. 31, 2019	May 31, 2019	Aug. 31, 2018	May 31, 2018	Aug. 31, 2019	Aug. 31, 2018
Earnings Per Share [Abstract]
Net income (loss)	$ (7,369)	$ (8,693)	$ (854)	$ 8,511	$ (16,062)	$ 7,657
Basic weighted average number of common shares outstanding	33,568		34,850		33,475	35,141
Effect of stock options and restricted stock units computed on treasury stock method						932
Diluted weighted average number of common shares outstanding	33,568		34,850		33,475	36,073
Earnings (loss) per share:
Basic	$ (0.22)		$ (0.02)		$ (0.48)	$ 0.22
Diluted	$ (0.22)		$ (0.02)		$ (0.48)	$ 0.21

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RESTRUCTURING CHARGES (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		15 Months Ended
	Aug. 31, 2019	Aug. 31, 2018	Aug. 31, 2019	Aug. 31, 2018	May 31, 2019
Restructuring Cost And Reserve [Line Items]
Restructuring charges	$ 2,272	$ 566	$ 2,272	$ 3,949	$ 10,300
Severance and employee related costs			1,063		5,300
Restructuring charges					5,000
Telematics Systems [Member]
Restructuring Cost And Reserve [Line Items]
Restructuring charges	2,300		2,300
Severance and employee related costs	1,100		1,100
Restructuring charges	$ 1,200		1,200
Impairment reduction of right-of-use asset			$ 1,200
Canton, Massachusetts [Member]
Restructuring Cost And Reserve [Line Items]
Restructuring charges					$ 4,500

XML

LEASES (Schedule of Supplemental Information Related to Operating Leases) (Details) $ in Thousands	6 Months Ended
	Aug. 31, 2019 USD ($)
Leases [Abstract]
Cash paid for amounts included in the measurement of operating lease liabilities	$ 4,067
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 3,728
Weighted average remaining lease term	7 years 4 months 24 days
Weighted average discount rate	5.47%

XML

CASH, CASH EQUIVALENTS AND INVESTMENTS (Details) - USD ($) $ in Thousands		Aug. 31, 2019	Feb. 28, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Adjusted Cost		$ 206,170	$ 280,333
Unrealized Gains (Losses)		189	315
Fair Value		206,359	280,648
Cash and Cash Equivalents [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		193,684	256,500
Short Term Marketable Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		7,789	17,512
Other Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		4,886	6,636
Cash [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Adjusted Cost		45,503	26,084
Unrealized Gains (Losses)
Fair Value		45,503	26,084
Cash [Member] | Cash and Cash Equivalents [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		45,503	26,084
Cash [Member] | Short Term Marketable Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Cash [Member] | Other Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Adjusted Cost		64,186	154,428
Unrealized Gains (Losses)
Fair Value		64,186	154,428
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member] | Cash and Cash Equivalents [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		64,186	154,428
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member] | Short Term Marketable Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member] | Other Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Mutual Fund [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Adjusted Cost	[1]	4,401	6,023
Unrealized Gains (Losses)	[1]	264	390
Fair Value	[1]	4,665	6,413
Mutual Fund [Member] | Fair Value, Inputs, Level 1 [Member] | Cash and Cash Equivalents [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	[1]
Mutual Fund [Member] | Fair Value, Inputs, Level 1 [Member] | Short Term Marketable Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	[1]
Mutual Fund [Member] | Fair Value, Inputs, Level 1 [Member] | Other Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	[1]	4,665	6,413
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	296
Unrealized Gains (Losses)		(75)	(73)
Fair Value		221	223
Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Cash and Cash Equivalents [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Short Term Marketable Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Other Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		221	223
Repurchase Agreements [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Adjusted Cost		72,000	72,000
Unrealized Gains (Losses)
Fair Value		72,000	72,000
Repurchase Agreements [Member] | Fair Value, Inputs, Level 2 [Member] | Cash and Cash Equivalents [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		72,000	72,000
Repurchase Agreements [Member] | Fair Value, Inputs, Level 2 [Member] | Short Term Marketable Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Repurchase Agreements [Member] | Fair Value, Inputs, Level 2 [Member] | Other Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Adjusted Cost		19,784	21,502
Unrealized Gains (Losses)			(2)
Fair Value		19,784	21,500
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Cash and Cash Equivalents [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		11,995	3,988
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Short Term Marketable Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		7,789	17,512
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Other Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value

[1] Amounts represent various equities, bond and money market mutual funds that are held in a “Rabbi Trust” and are restricted for payment obligations to non-qualified deferred compensation plan participants. In addition to the mutual funds above, our “Rabbi Trust” also included Corporate-Owned Life Insurance (COLI) starting in fiscal 2020. As of August 31, 2019, the cash surrender value of COLI was $2.0 million.

XML

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Disaggregation of Revenue by Type of Goods and Services and by Timing of Revenue Recognition) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2019	Aug. 31, 2018	Aug. 31, 2019	Aug. 31, 2018
Disaggregation Of Revenue [Line Items]
Revenues	$ 93,236	$ 96,037	$ 182,306	$ 190,925
Telematics Devices and Accessories [Member]
Disaggregation Of Revenue [Line Items]
Revenues	65,891	79,145	134,059	160,281
Professional Services [Member]
Disaggregation Of Revenue [Line Items]
Revenues	2,036	1,453	3,983	2,682
Recurring Application Subscriptions [Member]
Disaggregation Of Revenue [Line Items]
Revenues	25,309	15,439	44,264	27,962
Revenue Recognized At Point In Time [Member]
Disaggregation Of Revenue [Line Items]
Revenues	65,891	79,145	134,059	160,281
Revenue Recognized Over Time [Member]
Disaggregation Of Revenue [Line Items]
Revenues	$ 27,345	$ 16,892	$ 48,247	$ 30,644

XML

CONCENTRATION OF RISK (Details) - Customer Concentration Risk [Member] - Major Customer One [Member] - Minimum [Member]	6 Months Ended
	Aug. 31, 2019
Revenues [Member]
Concentration Risk [Line Items]
Concentration percentage	10.00%
Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration percentage	10.00%

XML

SEGMENT INFORMATION AND GEOGRAPHIC DATA (Schedule of Segment Information) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2019	Aug. 31, 2018	Aug. 31, 2019	Aug. 31, 2018
Segment Reporting Information [Line Items]
Revenues	$ 93,236	$ 96,037	$ 182,306	$ 190,925
Gross profit	$ 37,670	$ 39,821	$ 73,081	$ 77,912
Gross margin	40.00%	41.00%	40.00%	41.00%
Adjusted EBITDA	$ 10,647	$ 13,689	$ 18,216	$ 25,866
Operating Segments [Member] | Telematics Systems [Member]
Segment Reporting Information [Line Items]
Revenues	62,031	77,100	125,590	153,452
Gross profit	$ 24,310	$ 30,396	$ 49,321	$ 59,905
Gross margin	39.00%	39.00%	39.00%	39.00%
Adjusted EBITDA	$ 7,514	$ 11,682	$ 14,507	$ 22,496
Operating Segments [Member] | Software & Subscription Services [Member]
Segment Reporting Information [Line Items]
Revenues	31,205	18,937	56,716	37,473
Gross profit	$ 13,360	$ 9,425	$ 23,760	$ 18,007
Gross margin	43.00%	50.00%	42.00%	48.00%
Adjusted EBITDA	$ 3,947	$ 3,373	$ 6,321	$ 6,295
Corporate Expenses [Member]
Segment Reporting Information [Line Items]
Gross margin	0.00%	0.00%	0.00%	0.00%
Adjusted EBITDA	$ (814)	$ (1,366)	$ (2,612)	$ (2,925)

XML

OTHER FINANCIAL INFORMATION (Schedule of Interest Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2019	Aug. 31, 2018	Aug. 31, 2019	Aug. 31, 2018
Condensed Income Statements, Captions [Line Items]
Other interest expense	$ 252	$ 53	$ 410	$ 86
Total interest expense	5,555	3,767	11,011	6,432
2020 Convertible Notes [Member]
Condensed Income Statements, Captions [Line Items]
Stated interest	498	611	996	1,312
Amortization of note discount	1,327	1,515	2,620	3,228
Amortization of debt issue costs	168	176	331	394
Interest expense on convertible notes	1,993	2,302	3,947	4,934
2025 Convertible Notes [Member]
Condensed Income Statements, Captions [Line Items]
Stated interest	1,150	511	2,326	511
Amortization of note discount	2,012	839	4,031	839
Amortization of debt issue costs	148	62	297	62
Interest expense on convertible notes	$ 3,310	$ 1,412	$ 6,654	$ 1,412

XML

STOCKHOLDERS' EQUITY (Schedule of Stock-based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2019	Aug. 31, 2018	Aug. 31, 2019	Aug. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 3,183	$ 2,680	$ 5,726	$ 5,147
Cost of Revenues [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	162	212	337	389
Research and Development [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	633	420	1,046	785
Selling and Marketing [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	982	680	1,651	1,251
General and Administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 1,406	$ 1,368	$ 2,692	$ 2,722

XML

OTHER FINANCIAL INFORMATION (Schedule of Other Current Liabilities) (Details) - USD ($) $ in Thousands	Aug. 31, 2019	Feb. 28, 2019
Other Financial Information Schedule Of Other Current Liabilities Details [Abstract]
Operating lease liabilities (see Note 9)	$ 6,087
Litigation reserve	1,500	$ 1,500
Warranty reserves	1,799	1,398
Accrued restructuring costs (see Note 8)		752
Other	5,939	6,972
Total other current liabilities	$ 15,325	$ 10,622

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GOODWILL AND OTHER INTANGIBLE ASSETS (Schedule of Future Amortization Expense) (Details) - USD ($) $ in Thousands	Aug. 31, 2019	Feb. 28, 2019
Fiscal Year
2020 (remainder)	$ 6,559
2021	11,437
2022	9,803
2023	9,583
2024	6,523
Thereafter	25,417
Net	$ 69,322	$ 47,165

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FINANCING ARRANGEMENTS (Schedule of Balances Attributable to Financing Arrangements) (Details) - USD ($) $ in Thousands	Aug. 31, 2019	Feb. 28, 2019
Debt Instrument [Line Items]
Long-term debt	$ 300,097	$ 275,905
Less: Current portion	124,181
Long-term debt, net of current portion	175,916	275,905
2020 Convertible Notes [Member]
Debt Instrument [Line Items]
Long-term debt	118,199	115,249
2025 Convertible Notes [Member]
Debt Instrument [Line Items]
Long-term debt	165,001	$ 160,656
Due to Factors Under Revenue Assignment Agreements [Member]
Debt Instrument [Line Items]
Long-term debt	$ 16,897

XML

ACQUISITIONS

6 Months Ended

Aug. 31, 2019

Business Combinations [Abstract]

ACQUISITIONS

NOTE 2 – ACQUISITIONS

In addition to the Tracker UK acquisition in February 2019, we completed two additional acquisitions, LoJack Mexico and Synovia, during the first quarter of fiscal 2020.

Pursuant to our business combinations accounting policy, we 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. Our estimates and assumptions reflected in such preliminary valuations are subject to change within the measurement period (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. We expect to continue to obtain information to assist in determining the fair values of the net assets acquired during the measurement period. The following are the preliminary purchase price allocations as of August 31, 2019 for the three acquisitions (in thousands):

	Tracker UK						LoJack Mexico						Synovia
Purchase price				$	13,097					$	14,306					$	29,500
Add debt paid at closing					-						-						20,296
Less cash acquired					(66	)					(1,586	)					(905	)
Net cash paid					13,031						12,720						48,891
Less amount released from escrow					(973	)					-						-
Net consideration					12,058						12,720						48,891
Add previously held interest					-						2,021						-
Fair value of net assets and liabilities assumed:
Current assets other than cash	$	3,549					$	4,485					$	10,354
Property and equipment		1,835						4,029						24,840
Customer relationships		2,354						7,000						16,700
Trade name		2,354						-						1,600
Developed technology		1,830						-						3,800
Deferred tax assets		-						-						2,061
Other non-current assets		104						1,301						-
Current liabilities		(3,111	)					(2,361	)					(4,468	)
Due to factors		-						-						(19,692	)
Deferred revenue		(3,162	)					(4,507	)					(4,319	)
Deferred tax liability		(963	)					(1,039	)					-
Other non-current liabilities		(201	)					-						-
Total fair value of net assets acquired					4,589						8,908						30,876
Goodwill				$	7,469					$	5,833					$	18,015

Tracker UK

Effective February 25, 2019, we acquired Tracker UK, a LoJack licensee, for a total purchase price of £10.0 million, or $13.1 million, which was funded from our cash on hand. As a result of the acquisition, Tracker UK became a wholly-owned subsidiary and is consolidated with our financial statements beginning February 25, 2019 as a component of our Software and Subscription Services reportable segment.

We paid a premium (i.e., goodwill) over the fair value of the net tangible and identified intangible assets acquired, as we believe Tracker UK’s highly recognizable brand and extensive law enforcement relationships across the United Kingdom will help us to drive our European expansion by leveraging our complete portfolio of telematics devices, cloud and software services to develop advanced connected car solutions targeting auto dealers, OEMs, insurance providers and other enterprise customers. This acquisition enables us to integrate our European operations around advanced SVR and telematics solutions to support key enterprise customer opportunities on a pan-European basis.

The goodwill arising from the acquisition of Tracker UK is not deductible for income tax purposes.

LoJack Mexico

On March 19, 2019, we acquired LoJack Mexico, the exclusive licensee of LoJack technology for the Mexican market. LoJack Mexico will leverage our telematics and software-as-a-service solutions to expand product offering to its substantial subscriber base as well as serve auto dealers and OEMs, insurance providers and leasing companies throughout Mexico. We purchased the remaining 87.5% of the LoJack Mexico shares that we did not own for a cash purchase price of $14.3 million. Our previously held 12.5% equity interest in LoJack Mexico was determined to have a fair value of $2.0 million at acquisition date which resulted in a gain of $0.3 million, which was recorded as investment income in our condensed consolidated statements of comprehensive income (loss) for the six months ended August 31, 2019. LoJack Mexico is consolidated with our financial statements effective March 19, 2019 as a component of our Software and Subscription Services reportable segment.

Synovia

In April 2019, we acquired Synovia, a North American market leader in fleet safety and management for K-12 school bus and state and local government fleets, for a total cash purchase price of $49.8 million. Combined with the recent acquisitions of Tracker UK and LoJack Mexico, the Synovia acquisition expands our fleet management and vehicle safety services portfolio. This acquisition also accelerates our transformation to high-value subscription-based services. Synovia is consolidated with our financial statements effective April 12, 2019 as a component of our Software and Subscription Services reportable segment.

In conjunction with the acquisition of Synovia, we assumed the rights and obligations under certain revenue assignment arrangements with several financial institutions (the “Factors”). Pursuant to the terms of the arrangements, Synovia sold to the Factors rights to all future revenues of certain subscription contracts on a non-recourse basis for credit approved accounts. Under ASC 805, Business Combination, we recorded the amounts due to the Factors as a debt obligation at the fair value as of the acquisition date and the outstanding amount is presented as part of our long-term debt in our condensed consolidated balance sheet (see Note 7). The fair value of this debt of $19.7 million was determined using a pre-tax cost of debt of 4.7% at the time of our acquisition of Synovia.

We paid a premium (i.e., goodwill) over the fair value of the net tangible and identified intangible assets acquired, as we believe we will expand our fleet management and vehicle safety services portfolio and will increase our customer reach by bringing high-value and low-churn subscribers.

The goodwill arising from the acquisition of Synovia is deductible for income tax purposes.

We incurred approximately $1.1 million of total acquisition-related costs for the six months ended August 31, 2019 and $0.9 million in fiscal 2019. The acquisition-related costs were primarily legal expenses, which were recorded as part of our general and administrative expenses.

Pro forma financial information for the three and six months ended August 31, 2019 and 2018 for acquired companies is not disclosed as the results are not material to our condensed consolidated financial statements.

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COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Aug. 31, 2019

Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]

Schedule of Changes in Accumulated Other Comprehensive Income (Loss)

The following table shows the changes in Accumulated Other Comprehensive Income (Loss) for the six months ended August 31, 2019 (in thousands):

	Cumulative Foreign Currency Translation
Balances at February 28, 2019	$	(661	)
Other comprehensive loss, net of tax		(1,287	)
Balances at August 31, 2019	$	(1,948	)

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RESTRUCTURING CHARGES (Tables)

6 Months Ended

Aug. 31, 2019

Restructuring And Related Activities [Abstract]

Summary of Activity Resulting from Implementation of Restructuring Plan within Other Current and Non-current Liabilities

The following table summarizes the activity resulting from the implementation of the restructuring plan within other current and non-current liabilities (in thousands):

	Personnel			Facilities			Total
Restructuring liabilities as of February 28, 2019	$	2,779		$	2,977		$	5,756
Cease-use liability reclassified as reduction of Operating lease right-of-use assets		-			(2,977	)		(2,977	)
Charges		1,063			-			1,063
Payments		(1,314	)		-			(1,314	)
Restructuring liabilities as of August 31, 2019	$	2,528		$	-		$	2,528

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2019	Aug. 31, 2018	Aug. 31, 2019	Aug. 31, 2018
Revenues:
Revenues	$ 93,236	$ 96,037	$ 182,306	$ 190,925
Cost of revenues:
Cost of revenues	55,566	56,216	109,225	113,013
Gross profit	37,670	39,821	73,081	77,912
Operating expenses:
Research and development	7,924	7,599	14,810	14,200
Selling and marketing	15,868	12,523	30,515	25,020
General and administrative	12,893	11,991	30,377	25,427
Restructuring	2,272	566	2,272	3,949
Intangible asset amortization	3,318	2,893	6,358	5,641
Total operating expenses	42,275	35,572	84,332	74,237
Operating income (loss)	(4,605)	4,249	(11,251)	3,675
Non-operating income (expense):
Investment income	1,256	1,007	3,337	1,860
Interest expense	(5,555)	(3,767)	(11,011)	(6,432)
Gain on legal settlement				13,333
Loss on extinguishment of debt (see Note 7)		(2,033)		(2,033)
Other income (expense)	193	(277)	(206)	(503)
Total non-operating income (expense)	(4,106)	(5,070)	(7,880)	6,225
Income (loss) before income taxes and impairment loss and equity in net loss of affiliate	(8,711)	(821)	(19,131)	9,900
Income tax benefit (provision)	1,342	497	3,599	(1,274)
Income (loss) before impairment loss and equity in net loss of affiliate	(7,369)	(324)	(15,532)	8,626
Impairment loss and equity in net loss of affiliate		(530)	(530)	(969)
Net income (loss)	$ (7,369)	$ (854)	$ (16,062)	$ 7,657
Earnings (loss) per share:
Basic	$ (0.22)	$ (0.02)	$ (0.48)	$ 0.22
Diluted	$ (0.22)	$ (0.02)	$ (0.48)	$ 0.21
Shares used in computing earnings (loss) per share:
Basic	33,568	34,850	33,475	35,141
Diluted	33,568	34,850	33,475	36,073
Comprehensive income (loss):
Net income (loss)	$ (7,369)	$ (854)	$ (16,062)	$ 7,657
Other comprehensive income (loss):
Foreign currency translation adjustments	(1,018)	(14)	(1,287)	3
Total comprehensive income (loss)	(8,387)	(868)	(17,349)	7,660
Products [Member]
Revenues:
Revenues	62,031	76,974	125,590	153,890
Cost of revenues:
Cost of revenues	37,721	46,045	76,269	93,398
Application Subscriptions and Related Products and Service [Member]
Revenues:
Revenues	31,205	19,063	56,716	37,035
Cost of revenues:
Cost of revenues	$ 17,845	$ 10,171	$ 32,956	$ 19,615

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STOCKHOLDERS' EQUITY

6 Months Ended

Aug. 31, 2019

Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE 12 – STOCKHOLDERS’ EQUITY

Stock Repurchase

On December 10, 2018, our Board of Directors authorized a new share repurchase program under which we may repurchase up to $20.0 million of our outstanding common stock over the next 12 months, of which $10.0 million was utilized as of February 28, 2019. Under the stock repurchase program, we may repurchase shares in the open market. There were no stock repurchases during the six months ended August 31, 2019.

Employee Stock Purchase Plan

On June 7, 2018, our Board of Directors adopted the CalAmp Corp. 2018 Employee Stock Purchase Plan (the “ESPP”), which was approved by our stockholders on July 25, 2018. The ESPP provides for the issuance of 1,750,000 shares of our common stock. The first enrollment under the ESPP Plan commenced in February 2019. There are two enrollment periods each year that commence on February 1^st and August 1^st and lasts for six months. Stock-based compensation expense related to the ESPP for the three and six months ended August 31, 2019 was $0.2 million and $0.3 million, respectively.

Equity Awards

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

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
Cost of revenues	$	162	$	212	$	337	$	389
Research and development		633		420		1,046		785
Selling and marketing		982		680		1,651		1,251
General and administrative		1,406		1,368		2,692		2,722
	$	3,183	$	2,680	$	5,726	$	5,147

Changes in our outstanding stock options during the six months ended August 31, 2019 were as follows (options in thousands):

	Number of Options			Weighted Average Exercise Price		Weighted average remaining contractual life (years)		Aggregate intrinsic value
Outstanding at February 28, 2019		1,054		$	13.44		5.8
Granted		171			11.11
Exercised		(83	)		2.36
Forfeited or expired		—			—
Outstanding at August 31, 2019		1,142		$	13.90		6.3	$	1,349
Exercisable at August 31, 2019		717		$	12.20		4.8	$	1,349

Changes in our outstanding restricted stock shares, performance stock units (“PSUs”) and restricted stock units (“RSUs”) during the six months ended August 31, 2019 were as follows (restricted shares, PSUs and RSUs in thousands):

	Number of Restricted Shares, PSUs and RSUs			Weighted Average Grant Date Fair Value		Shares Retained to Cover Statutory Minimum Withholding Taxes
Outstanding at February 28, 2019		1,507		$	19.77
Granted		1,544			11.30
Vested		(441	)		18.91		150
Forfeited		(96	)		20.04
Outstanding at August 31, 2019		2,514		$	14.69

As of August 31, 2019, there was $36.4 million of total unrecognized stock-based compensation cost related to outstanding nonvested equity awards that is expected to be recognized as an expense over a weighted-average remaining vesting period of 3.3 years.

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INVENTORIES

6 Months Ended

Aug. 31, 2019

Inventory Disclosure [Abstract]

INVENTORIES

NOTE 4 - INVENTORIES

Inventories consist of the following (in thousands):

	August 31,		February 28,
	2019		2019
Raw materials	$	22,560	$	14,141
Work in process		3		72
Finished goods		26,978		17,820
	$	49,541	$	32,033

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RESTRUCTURING CHARGES

6 Months Ended

Aug. 31, 2019

Restructuring And Related Activities [Abstract]

RESTRUCTURING CHARGES

NOTE 8 – RESTRUCTURING CHARGES

Beginning in the first quarter of fiscal 2019, we commenced a plan to capture certain synergies and cost savings related to streamlining our global operations and sales organization, as well as rationalize certain leased properties that are not fully occupied. Our plan is aligned with our strategy to integrate the global sales organization and further outsource manufacturing functions in order to drive operational efficiency, increase supplier geographic diversity, and reduce operating expenses. To date, total restructuring charges were $10.3 million, comprised of $5.3 million in severance and employee related costs, and $5.0 million for vacant office and manufacturing facility space. Restructuring charges related to vacant office and manufacturing facility space was due primarily to the vacancy in Canton, Massachusetts of $4.5 million. Substantially all charges related to severance and employee costs were under the Telematics Systems reportable segment. As a result of the adoption of ASC 842, effective March 1, 2019, the balance of the restructuring liability related to certain facility leases have been reclassified as a reduction of the Operating lease right-of-use assets in our condensed consolidated balance sheet.

For the three and six months ended August 31, 2019, total restructuring charges were $2.3 million, comprised of $1.1 million in severance and employee related costs, and $1.2 million for vacant office space. Substantially all charges were recorded under the Telematics Systems reportable segment. The impairment of $1.2 million for the vacant office space was recorded as a reduction of Operating lease right-of-use assets in our condensed consolidated balance sheet as of August 31, 2019. The restructuring liabilities related to personnel were included in Accrued payroll and employee benefits in our condensed consolidated balance sheets as of August 31, 2019 and February 28, 2019.

The anticipated rent payments for the vacant portion of leased facilities will be made through December 2025. There is no guarantee that the termination and cease use charges will not exceed the estimates or that the impact of any future potential sub-lease rentals will be realized. The following table summarizes the activity resulting from the implementation of the restructuring plan within other current and non-current liabilities (in thousands):

	Personnel			Facilities			Total
Restructuring liabilities as of February 28, 2019	$	2,779		$	2,977		$	5,756
Cease-use liability reclassified as reduction of Operating lease right-of-use assets		-			(2,977	)		(2,977	)
Charges		1,063			-			1,063
Payments		(1,314	)		-			(1,314	)
Restructuring liabilities as of August 31, 2019	$	2,528		$	-		$	2,528

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CONCENTRATION OF RISK

6 Months Ended

Aug. 31, 2019

Risks And Uncertainties [Abstract]

CONCENTRATION OF RISK

NOTE 14 - CONCENTRATION OF RISK

Significant Customers

We sell telematics products and services to large global enterprises in the industrial equipment, transportation and automotive market verticals. One of our customers accounted for more than 10% of our total revenue and accounts receivable as follows (rounded):

	Three Months Ended August 31,						Six Months Ended August 31,
	2019			2018			2019			2018
Revenues:
Customer A		10	%		16	%		12	%		14	%

	August 31,			February 28,
	2019			2019
Accounts receivable:
Customer A		10	%		14	%

Significant Suppliers

We purchase a significant amount of our product inventory from certain manufacturers or suppliers including components, assemblies and electronic manufacturing parts. These suppliers are located in Asia, including China. The inventory is purchased under standard supply agreements that outline the terms of the product delivery. The title and risk of loss of the product passes to us upon shipment from the manufacturers’ plant or warehouse. As identified below, some of these manufacturers accounted for more than 10% of our purchases and accounts payable as follows (rounded):

	Three Months Ended August 31,						Six Months Ended August 31,
	2019			2018			2019			2018
Inventory purchases:
Supplier A		28	%		29	%		30	%		29	%
Supplier B		13	%		21	%		13	%		21	%
Supplier C		11	%		0	%		5	%		0	%

	August 31,			February 28,
	2019			2019
Accounts payable:
Supplier A		15	%		30	%
Supplier B		12	%		18	%

We are currently reliant upon these suppliers for products. Although we believe that we can obtain products from other sources, the loss of a significant supplier could have a material impact on our financial condition and results of operations as the products that are being purchased may not be available on similar terms from another supplier.

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LEGAL PROCEEDINGS

6 Months Ended

Aug. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

LEGAL PROCEEDINGS

NOTE 18 – LEGAL PROCEEDINGS

Omega patent infringement claim

As previously disclosed in our Form 10-Q for the fiscal quarter ended May 31, 2019 that was filed with the U.S. Securities and Exchange Commission on June 28, 2019, we filed motions with the court seeking judgment as a matter of law and for a new trial in response to the patent infringement law suit filed by Omega Patents, LLC (“Omega”) that was decided against us in 2016. The court denied our motions on November 14, 2017. We then appealed to the Court of Appeals for the Federal Circuit (the “Federal Circuit”). The appeal was fully briefed, and the court heard oral argument on January 9, 2019. On April 8, 2019, the Federal Circuit vacated the compensatory and enhanced damages and attorney’s fees awarded by the trial court to Omega. The Federal Circuit also set aside the jury’s verdict that our alleged infringement was willful, and remanded the case for a new trial. As a result, substantially all of the previously reserved legal provisions of $19.1 million as of November 30, 2018 was reversed as of February 28, 2019. The reversal was recorded as a reduction of general and administrative expenses in our consolidated statement of comprehensive income for the fiscal year ended February 28, 2019. The district court scheduled a new trial which commenced on September 23, 2019. We also initiated ex parte reexamination proceedings filed in the U.S. Patent and Trademark Office seeking to invalidate a number of Omega’s patents involved in the litigation. Those proceedings currently remain pending. We continue to believe that our products do not infringe on any of Omega’s patents. While it is not feasible to predict with certainty the outcome of this litigation, we believe that its ultimate resolution would not have a material adverse effect on our consolidated results of operations, financial condition and cash flows.

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 us. In particular, in the ordinary course of business, we may receive claims concerning personnel matters, contract performance, or claims that our products or services infringe the intellectual property of third parties. In connection with these matters, we may be required to enter into license agreements or other settlement arrangements that require us to make significant payments in the future. While the outcome of any such claims or litigation cannot be predicted with certainty, management does not believe that the outcome of any such matters existing at the present time would have a material adverse effect on our consolidated results of operations, financial condition and cash flows.

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CASH, CASH EQUIVALENTS AND INVESTMENTS (Tables)

6 Months Ended

Aug. 31, 2019

Cash And Cash Equivalents [Abstract]

Schedule of Cash and Marketable Securities

The following tables summarize our financial instrument assets (in thousands):

	As of August 31, 2019
								Balance Sheet Classification
								of Fair Value
			Unrealized					Cash and		Short-Term
	Adjusted		Gains			Fair		Cash		Marketable		Other
	Cost		(Losses)			Value		Equivalents		Securities		Assets
Cash	$	45,503	$	—		$	45,503	$	45,503	$	—	$	—
Level 1:
Money market funds		64,186		—			64,186		64,186		—		—
Mutual funds (1)		4,401		264			4,665		—		—		4,665
International equities		296		(75	)		221		—		—		221
Level 2:
Repurchase agreements		72,000		—			72,000		72,000		—		—
Corporate bonds		19,784		—			19,784		11,995		7,789		—
Total	$	206,170	$	189		$	206,359	$	193,684	$	7,789	$	4,886

	As of February 28, 2019
								Balance Sheet Classification
								of Fair Value
			Unrealized					Cash and		Short-Term
	Adjusted		Gains			Fair		Cash		Marketable		Other
	Cost		(Losses)			Value		Equivalents		Securities		Assets
Cash	$	26,084	$	—		$	26,084	$	26,084	$	—	$	—
Level 1:
Money market funds		154,428		—			154,428		154,428		—		—
Mutual funds (1)		6,023		390			6,413		—		—		6,413
International equities		296		(73	)		223		—		—		223
Level 2:
Repurchase agreements		72,000		—			72,000		72,000		—		—
Corporate bonds		21,502		(2	)		21,500		3,988		17,512		—
Total	$	280,333	$	315		$	280,648	$	256,500	$	17,512	$	6,636

(1) Amounts represent various equities, bond and money market mutual funds that are held in a “Rabbi Trust” and are restricted for payment obligations to non-qualified deferred compensation plan participants. In addition to the mutual funds above, our “Rabbi Trust” also included Corporate-Owned Life Insurance (COLI) starting in fiscal 2020. As of August 31, 2019, the cash surrender value of COLI was $2.0 million. 

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INVENTORIES (Details) - USD ($) $ in Thousands	Aug. 31, 2019	Feb. 28, 2019
Inventory Disclosure [Abstract]
Raw materials	$ 22,560	$ 14,141
Work in process	3	72
Finished goods	26,978	17,820
Inventories	$ 49,541	$ 32,033

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ACQUISITIONS (Summary of Preliminary Purchase Price Allocation) (Details) $ in Thousands, £ in Millions					1 Months Ended		6 Months Ended
	Apr. 12, 2019 USD ($)	Mar. 19, 2019 USD ($)	Feb. 25, 2019 USD ($)	Feb. 25, 2019 GBP (£)	Aug. 31, 2019 USD ($)	Feb. 28, 2019 USD ($)	Aug. 31, 2019 USD ($)	Aug. 31, 2018 USD ($)
Business Acquisition [Line Items]
Add debt paid at closing								$ 7,305
Net cash paid							$ 60,634
Fair value of net assets and liabilities assumed:
Goodwill					$ 104,037	$ 80,805	104,037
Tracker UK [Member]
Business Acquisition [Line Items]
Purchase price			$ 13,100	£ 10.0			13,097
Less cash acquired							(66)
Net cash paid							13,031
Less amount released from escrow							(973)
Net consideration							12,058
Fair value of net assets and liabilities assumed:
Current assets other than cash					3,549		3,549
Property and equipment					1,835		1,835
Other non-current assets					104		104
Current liabilities					(3,111)		(3,111)
Deferred revenue					(3,162)		(3,162)
Deferred tax liability					(963)		(963)
Other non-current liabilities					(201)		(201)
Total fair value of net assets acquired					4,589		4,589
Goodwill					7,469		7,469
LoJack Mexico [Member]
Business Acquisition [Line Items]
Purchase price							14,306
Less cash acquired							(1,586)
Net cash paid		$ 14,300			1,700	$ 2,000	12,720
Net consideration							12,720
Add previously held interest							2,021
Fair value of net assets and liabilities assumed:
Current assets other than cash					4,485		4,485
Property and equipment					4,029		4,029
Other non-current assets					1,301		1,301
Current liabilities					(2,361)		(2,361)
Deferred revenue					(4,507)		(4,507)
Deferred tax liability					(1,039)		(1,039)
Total fair value of net assets acquired					8,908		8,908
Goodwill					5,833		5,833
Synovia [Member]
Business Acquisition [Line Items]
Purchase price	$ 49,800						29,500
Add debt paid at closing							20,296
Less cash acquired							(905)
Net cash paid	$ 49,800						48,891
Net consideration							48,891
Fair value of net assets and liabilities assumed:
Current assets other than cash					10,354		10,354
Property and equipment					24,840		24,840
Deferred tax assets					2,061		2,061
Current liabilities					(4,468)		(4,468)
Due to factors					(19,692)		(19,692)
Deferred revenue					(4,319)		(4,319)
Total fair value of net assets acquired					30,876		30,876
Goodwill					18,015		18,015
Dealer Relationships [Member] | Tracker UK [Member]
Fair value of net assets and liabilities assumed:
Finite-lived intangible assets					2,354		2,354
Dealer Relationships [Member] | LoJack Mexico [Member]
Fair value of net assets and liabilities assumed:
Finite-lived intangible assets					7,000		7,000
Dealer Relationships [Member] | Synovia [Member]
Fair value of net assets and liabilities assumed:
Finite-lived intangible assets					16,700		16,700
Trade Names [Member] | Tracker UK [Member]
Fair value of net assets and liabilities assumed:
Finite-lived intangible assets					2,354		2,354
Trade Names [Member] | Synovia [Member]
Fair value of net assets and liabilities assumed:
Finite-lived intangible assets					1,600		1,600
Developed Technology [Member] | Tracker UK [Member]
Fair value of net assets and liabilities assumed:
Finite-lived intangible assets					1,830		1,830
Developed Technology [Member] | Synovia [Member]
Fair value of net assets and liabilities assumed:
Finite-lived intangible assets					$ 3,800		$ 3,800

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SEGMENT INFORMATION AND GEOGRAPHIC DATA (Tables)

6 Months Ended

Aug. 31, 2019

Segment Reporting [Abstract]

Summary of Segment Information

Segment information for the three and six months ended August 31, 2019 and 2018 is as follows (in thousands):

	Three Months Ended August 31, 2019												Three Months Ended August 31, 2018
	Operating Segments												Operating Segments
	Telematics Systems			Software & Subscription Services			Corporate Expenses			Total			Telematics Systems			Software & Subscription Services			Corporate Expenses			Total
Revenues	$	62,031		$	31,205		$	—		$	93,236		$	77,100		$	18,937		$	—		$	96,037
Gross profit	$	24,310		$	13,360		$	—		$	37,670		$	30,396		$	9,425		$	—		$	39,821
Gross margin		39	%		43	%		0	%		40	%		39	%		50	%		0	%		41	%
Adjusted EBITDA	$	7,514		$	3,947		$	(814	)	$	10,647		$	11,682		$	3,373		$	(1,366	)	$	13,689

	Six Months Ended August 31, 2019												Six Months Ended August 31, 2018
	Operating Segments												Operating Segments
	Telematics Systems			Software & Subscription Services			Corporate Expenses			Total			Telematics Systems			Software & Subscription Services			Corporate Expenses			Total
Revenues	$	125,590		$	56,716		$	—		$	182,306		$	153,452		$	37,473		$	—		$	190,925
Gross profit	$	49,321		$	23,760		$	—		$	73,081		$	59,905		$	18,007		$	—		$	77,912
Gross margin		39	%		42	%		0	%		40	%		39	%		48	%		0	%		41	%
Adjusted EBITDA	$	14,507		$	6,321		$	(2,612	)	$	18,216		$	22,496		$	6,295		$	(2,925	)	$	25,866

Summary of Adjusted EBITDA

The adjustments to our net income (losses) prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) to calculate Adjusted EBITDA are itemized below (in thousands):

	Three Months Ended August 31,						Six Months Ended August 31,
	2019			2018			2019			2018
Net income (loss)	$	(7,369	)	$	(854	)	$	(16,062	)	$	7,657
Investment income		(1,256	)		(1,007	)		(3,337	)		(1,860	)
Interest expense		5,555			3,767			11,011			6,432
Income tax provision		(1,342	)		(497	)		(3,599	)		1,274
Depreciation		5,191			2,298			9,036			4,341
Amortization of intangible assets		3,318			2,893			6,358			5,641
Stock-based compensation		3,183			2,680			5,726			5,147
Loss on extinguishment of debt		—			2,033			—			2,033
Impairment loss and equity in net loss of affiliate		—			530			530			969
Restructuring charges		2,272			566			2,272			3,949
Non-recurring legal expenses		777			1,023			4,584			3,137
Acquisition and integration related expenses		46			—			1,190			—
Gain on LoJack battery performance legal Settlement		—			—			-			(13,333	)
Other		272			257			507			479
Adjusted EBITDA	$	10,647		$	13,689		$	18,216		$	25,866

Summary of Revenues by Geographic Area

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

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
United States	$	68,684	$	70,647	$	131,806	$	141,064
Europe, Middle East and Africa		13,298		13,788		26,724		27,132
Latin America		4,227		1,723		7,713		4,129
Canada		2,481		2,338		5,317		3,702
Asia and Pacific Rim		1,940		3,480		4,349		7,239
All other		2,606		4,061		6,397		7,659
	$	93,236	$	96,037	$	182,306	$	190,925

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LEASES (Summary of Lease-related Assets and Liabilities) (Details) $ in Thousands	Aug. 31, 2019 USD ($)
Schedule Of Lease Assets And Liabilities [Abstract]
Operating lease right-of-use assets	$ 27,977
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	camp:OperatingLeaseRightOfUseAssetsMember
Operating lease liabilities (current)	$ 6,087
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	us-gaap:OtherCurrentLiabilitiesMember
Operating lease liabilities	$ 29,780
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	camp:OperatingLeaseLiabilitiesMember
Total lease liabilities	$ 35,867

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LEASES (Schedule of Minimum Lease Payments Under Operating Leases with Non-cancellable Terms in Excess of One Year) (Details) $ in Thousands	Feb. 28, 2019 USD ($)
Operating Leases Future Minimum Payments Due [Abstract]
2020	$ 7,565
2021	6,386
2022	6,242
2023	6,199
2024	6,126
Thereafter	7,659
Total minimum lease payments	$ 40,177

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GOODWILL AND OTHER INTANGIBLE ASSETS (Schedule of Other Intangible Assets) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Aug. 31, 2019	Aug. 31, 2018	Aug. 31, 2019	Aug. 31, 2018	Feb. 28, 2019
Finite-Lived Intangible Assets [Line Items]
Gross, Beginning balance			$ 106,437
Additions			29,100
Gross, Ending balance	$ 135,537		135,537		$ 106,437
Accumulated Amortization, Beginning balance			59,272
Expense	3,318	$ 2,893	6,358	$ 5,641
Accumulated Amortization, Ending balance	65,630		65,630		59,272
Effect of Foreign Currency Translation			(585)
Net ending	69,322		69,322		47,165
Net beginning			47,165
Developed Technology Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Gross, Beginning balance			23,603
Additions			3,800
Gross, Ending balance	27,403		27,403		23,603
Accumulated Amortization, Beginning balance			18,253
Expense			1,553
Accumulated Amortization, Ending balance	19,806		19,806		18,253
Effect of Foreign Currency Translation			(118)
Net ending	7,479		7,479		5,350
Net beginning			$ 5,350
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]
Amortization period			10 years
Gross, Beginning balance			$ 40,091
Additions			1,600
Gross, Ending balance	41,691		41,691		40,091
Accumulated Amortization, Beginning balance			12,644
Expense			1,958
Accumulated Amortization, Ending balance	14,602		14,602		12,644
Effect of Foreign Currency Translation			(164)
Net ending	26,925		26,925		27,447
Net beginning			27,447
Customer Lists [Member]
Finite-Lived Intangible Assets [Line Items]
Gross, Beginning balance			25,304
Additions
Gross, Ending balance	25,304		25,304		25,304
Accumulated Amortization, Beginning balance			21,307
Expense			840
Accumulated Amortization, Ending balance	22,147		22,147		21,307
Effect of Foreign Currency Translation
Net ending	3,157		3,157		3,997
Net beginning			$ 3,997
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 and Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross, Beginning balance			$ 16,850
Additions			23,700
Gross, Ending balance	40,550		40,550		16,850
Accumulated Amortization, Beginning balance			6,908
Expense			1,988
Accumulated Amortization, Ending balance	8,896		8,896		6,908
Effect of Foreign Currency Translation			(303)
Net ending	31,351		31,351		9,942
Net beginning			$ 9,942
Dealer and Customer Relationships [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization period			7 years
Dealer and Customer Relationships [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization period			12 years
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization period			5 years
Gross, Beginning balance			$ 589
Additions
Gross, Ending balance	589		589		589
Accumulated Amortization, Beginning balance			160
Expense			19
Accumulated Amortization, Ending balance	179		179		160
Effect of Foreign Currency Translation
Net ending	$ 410		410		$ 429
Net beginning			$ 429

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OTHER ASSETS (Schedule of Other Assets) (Details) - USD ($) $ in Thousands	Aug. 31, 2019	Feb. 28, 2019
Other Assets Non Current [Line Items]
Deferred product cost	$ 8,420	$ 10,094
Deferred compensation plan assets	6,662	6,413
Prepaid commissions	1,330
Investment in international licensees	561	2,263
Other	2,954	1,090
Total	22,154	22,510
ThinxNet GmbH [Member]
Other Assets Non Current [Line Items]
Equity investment in and loan to equity investee	$ 2,227	$ 2,650

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FINANCING ARRANGEMENTS (Summary of Liability and Equity Components of Notes, Issuance Costs and Applicable Assumptions Used for Calculation) (Details) $ / shares in Units, $ in Millions	1 Months Ended	6 Months Ended
	Jul. 31, 2018	Aug. 31, 2019 USD ($) $ / shares	Jul. 20, 2018 USD ($)
2020 Convertible Notes [Member]
Debt Instrument [Line Items]
Initial conversion rate (shares per $1,000 principal amount)		36.2398
Initial conversion price per share | $ / shares		$ 27.5940
Fair value of liability component upon issuance		$ 138.9
Discount Rate		0.0620
Debt Instrument, Measurement Input [Extensible List]		us-gaap:MeasurementInputDiscountRateMember
Fair value measurement level		Level 3
Fair value of embedded equity component upon issuance		$ 33.6
Deferred tax asset effect		16.0
Total issuance cost		4.3
Equity component		1.0
Deferred tax asset effect		0.4
Fair value of convertible notes as of August 31, 2019 (Level 2 measurement)		$ 120.5	$ 47.6
2025 Convertible Notes [Member]
Debt Instrument [Line Items]
Initial conversion rate (shares per $1,000 principal amount)	41.3875	32.5256
Initial conversion price per share | $ / shares		$ 30.7450
Fair value of liability component upon issuance		$ 160.8
Discount Rate		0.0756
Debt Instrument, Measurement Input [Extensible List]		us-gaap:MeasurementInputDiscountRateMember
Fair value measurement level		Level 3
Fair value of embedded equity component upon issuance		$ 69.2
Deferred tax asset effect		17.3
Total issuance cost		7.3
Equity component		2.2
Deferred tax asset effect		0.5
Fair value of convertible notes as of August 31, 2019 (Level 2 measurement)		$ 183.1

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PRODUCT WARRANTIES (Details)	6 Months Ended
	Aug. 31, 2019
Minimum [Member]
Valuation And Qualifying Accounts Disclosure [Line Items]
Warranty Term	1 year
Maximum [Member]
Valuation And Qualifying Accounts Disclosure [Line Items]
Warranty Term	2 years

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SEGMENT INFORMATION AND GEOGRAPHIC DATA (Summary of Revenues by Geographic Area) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2019	Aug. 31, 2018	Aug. 31, 2019	Aug. 31, 2018
Segment Reporting Information [Line Items]
Revenues	$ 93,236	$ 96,037	$ 182,306	$ 190,925
United States [Member]
Segment Reporting Information [Line Items]
Revenues	68,684	70,647	131,806	141,064
Europe, Middle East and Africa [Member]
Segment Reporting Information [Line Items]
Revenues	13,298	13,788	26,724	27,132
Latin America [Member]
Segment Reporting Information [Line Items]
Revenues	4,227	1,723	7,713	4,129
Canada [Member]
Segment Reporting Information [Line Items]
Revenues	2,481	2,338	5,317	3,702
Asia and Pacific Rim [Member]
Segment Reporting Information [Line Items]
Revenues	1,940	3,480	4,349	7,239
All other [Member]
Segment Reporting Information [Line Items]
Revenues	$ 2,606	$ 4,061	$ 6,397	$ 7,659

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OTHER FINANCIAL INFORMATION (Schedule of Cash Payments for Interest and Income Taxes) (Details) - USD ($) $ in Thousands	6 Months Ended
	Aug. 31, 2019	Aug. 31, 2018
Other Financial Information [Abstract]
Interest expense paid	$ 3,358	$ 1,547
Income tax paid	$ 466	$ 738

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STOCKHOLDERS' EQUITY (Summary of Restricted Stock Shares and RSUs Activity) (Details) shares in Thousands	6 Months Ended
	Aug. 31, 2019 $ / shares shares
Number of Restricted Shares, PSUs and RSUs
Outstanding, beginning balance	1,507
Granted	1,544
Vested	(441)
Forfeited	(96)
Outstanding, ending balance	2,514
Weighted Average Grant Date Fair Value
Outstanding, beginning balance | $ / shares	$ 19.77
Granted | $ / shares	11.30
Vested | $ / shares	18.91
Forfeited | $ / shares	20.04
Outstanding, ending balance | $ / shares	$ 14.69
Vested, Shares Retained to Cover Statutory Minimum Withholding Taxes	150

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OTHER ASSETS

6 Months Ended

Aug. 31, 2019

Other Assets Noncurrent Disclosure [Abstract]

OTHER ASSETS

NOTE 6 – OTHER ASSETS

Other assets consist of the following (in thousands):

	August 31,		February 28,
	2019		2019
Deferred product cost	$	8,420	$	10,094
Deferred compensation plan assets		6,662		6,413
Equity investment in and loan to ThinxNet GmbH		2,227		2,650
Prepaid commissions		1,330		-
Investment in international licensees		561		2,263
Other		2,954		1,090
	$	22,154	$	22,510

We have a non-qualified deferred compensation plan in which certain members of management and all non-employee directors are eligible to participate. Participants may defer a portion of their compensation until retirement or another date specified by them in accordance with the plan. We are funding the plan obligations through cash deposits to a Rabbi Trust that are invested in various equities, bond, money market mutual funds and COLI in generally the same proportion as investment elections made by the participants. The deferred compensation plan liability is included in other non-current liabilities in the accompanying consolidated balance sheets.

Our investment in international licensees at August 31, 2019 consists of equity interests in Benelux and French licensees. Generally, the investments in international licensees are accounted for using the cost method of accounting and carried at cost as we do not exercise significant influence over these investees. On March 19, 2019, we acquired the remaining equity interest in LoJack Mexico (Note 2) and our original investment of $1.7 million became part of the purchase price upon completing the acquisition of the business.

Effective August 24, 2017, we acquired an ownership interest valued at $1.4 million in ThinxNet GmbH, a company headquartered in Munich, Germany (“ThinxNet”). ThinxNet is an early stage company focused on commercializing cloud-based mobile device and applications in the automotive sector throughout Europe. This represents a cost basis investment as we cannot exercise significant influence over the investee. Contemporaneously, we executed an unsecured convertible note receivable for $1.27 million with an interest rate of 6%, which had an initial fixed term of 12 months, after which the loan could be converted into equity in ThinxNet or a loan due on demand at our option. The equity investment and note receivable were consideration we received in exchange for our outstanding accounts receivable from ThinxNet. No gain or loss was recorded on this exchange. 

In August 2018, ThinxNet commenced a subsequent financing transaction to raise additional funds for working capital purposes. In connection with this transaction, we converted approximately $300,000 of outstanding accounts receivable due from ThinxNet into additional ownership interest in an in-kind exchange of assets at the current valuation. Based on the fair value of ThinxNet at the time of conversion, we revalued the initial ownership interest and recorded an impairment charge of $326,000, which is netted within Investment Income in our consolidated statement of comprehensive income (loss) for the three months ended August 31, 2018. Effective March 2019, we notified ThinxNet that we expect the outstanding loan to be repaid by June 30, 2019. On June 26, 2019, we agreed to settle the matter providing for repayment by ThinxNet of the outstanding loan in three equal quarterly installments of approximately $423,000 through December 2019. As of August 31, 2019, we received the first quarterly installment.

Our investments in licensees and ThinxNet without readily determinable fair values are measured at cost less impairment, adjusted for observable price changes for an identical or similar investment of the same issuer.

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INCOME TAXES

6 Months Ended

Aug. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 10 - INCOME TAXES

We use the assets and liabilities method when accounting for income taxes. Under this method, deferred income tax asset and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Under U.S. GAAP we are allowed to make an accounting policy choice to either: (1) treat taxes due on future GILTI inclusions in U.S. taxable income as a current-period expense when incurred (the “period cost method”); or (2) factor in such amounts into our measurement of our deferred taxes (the “deferred method”). We have elected to account for GILTI as a period cost in the year the tax is incurred. Accordingly, no GILTI-related deferred amounts were recorded.  

We file income tax returns in the U.S. federal jurisdiction, various U.S. states including Puerto Rico, Mexico, Canada, Ireland, Italy, United Kingdom, the Netherlands, Brazil and New Zealand. Certain income tax returns for the years 2014 through present remain open to examination by U.S. federal and state tax authorities. Our tax returns in the foreign jurisdictions remain open for examination for varying years from 2013 to the present. We believe that we have adequate reserves for any uncertain tax positions. It is reasonably possible the amount of unrecognized tax benefits that could be realized within the next 12 months is $0.6 million.

Our net deferred tax assets increased during the six months ending August 31, 2019 as a result of recording a deferred tax asset for additional net operating loss carryforwards for the period, reversal of valuation allowance against foreign tax credits and recording a preliminary net deferred tax asset relating to our acquisitions through the quarter ended August 31, 2019 (see Note 2).

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PRODUCT WARRANTIES (Tables)

6 Months Ended

Aug. 31, 2019

Product Warranties Disclosures [Abstract]

Schedule of Product Warranty Liability

Activity in the accrued warranty costs liability is as follows (in thousands):

	Six Months Ended
	August 31,
	2019			2018
Balance at beginning of period	$	1,399		$	5,734
Charged to costs and expenses		1,100			558
Deductions		(700	)		(722	)
Balance at end of period	$	1,799		$	5,570

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Aug. 31, 2019	Feb. 28, 2019
Current assets:
Cash and cash equivalents	$ 193,684	$ 256,500
Short-term marketable securities	7,789	17,512
Accounts receivable, net	75,600	78,079
Inventories	49,541	32,033
Prepaid expenses and other current assets	24,555	19,373
Total current assets	351,169	403,497
Property and equipment, net	56,920	27,023
Operating lease right-of-use assets	27,977
Deferred income tax assets	27,863	22,626
Goodwill	104,037	80,805
Other intangible assets, net	69,322	47,165
Other assets	22,154	22,510
Total assets	659,442	603,626
Current liabilities:
Current portion of long-term debt	124,181
Accounts payable	40,270	39,898
Accrued payroll and employee benefits	9,329	8,808
Deferred revenue	31,889	24,264
Other current liabilities	15,325	10,622
Total current liabilities	220,994	83,592
Long-term debt, net of current portion	175,916	275,905
Operating lease liabilities	29,780
Other non-current liabilities	39,456	38,476
Total liabilities	466,146	397,973
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; 34,113 and 33,555 shares issued and outstanding at August 31, 2019 and February 28, 2019, respectively	341	336
Additional paid-in capital	213,192	208,205
Accumulated deficit	(18,289)	(2,227)
Accumulated other comprehensive loss	(1,948)	(661)
Total stockholders' equity	193,296	205,653
Total Liabilities and Stockholders' Equity	$ 659,442	$ 603,626

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EARNINGS PER SHARE (Tables)

6 Months Ended

Aug. 31, 2019

Earnings Per Share [Abstract]

Schedule of Weighted Average Number of Shares

The calculation of the basic and diluted income (loss) per share of common stock is as follows (in thousands, except per share value):

	Three Months Ended						Six Months Ended
	August 31,						August 31,
	2019			2018			2019			2018
Net income (loss)	$	(7,369	)	$	(854	)	$	(16,062	)	$	7,657
Basic weighted average number of common shares outstanding		33,568			34,850			33,475			35,141
Effect of stock options and restricted stock units computed on treasury stock method		—			—			-			932
Diluted weighted average number of common shares outstanding		33,568			34,850			33,475			36,073
Earnings (loss) per share:
Basic	$	(0.22	)	$	(0.02	)	$	(0.48	)	$	0.22
Diluted	$	(0.22	)	$	(0.02	)	$	(0.48	)	$	0.21

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OTHER ASSETS (Tables)

6 Months Ended

Aug. 31, 2019

Other Assets Noncurrent Disclosure [Abstract]

Schedule of Other Assets

Other assets consist of the following (in thousands):

	August 31,		February 28,
	2019		2019
Deferred product cost	$	8,420	$	10,094
Deferred compensation plan assets		6,662		6,413
Equity investment in and loan to ThinxNet GmbH		2,227		2,650
Prepaid commissions		1,330		-
Investment in international licensees		561		2,263
Other		2,954		1,090
	$	22,154	$	22,510

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]
Balances at Feb. 28, 2018	$ 198,916	$ 357	$ 218,217	$ (19,459)	$ (199)
Balances (in shares) at Feb. 28, 2018		35,718
Cumulative adjustment upon adoption, net of tax | ASU 2016-01 [Member]				434	(434)
Cumulative adjustment upon adoption, net of tax | ASC 606 [Member]	(1,595)			(1,595)
Net income (loss)	8,511			8,511
Stock-based compensation expense	2,467		2,467
Shares issued on net share settlement of equity awards	(233)		(233)
Shares issued on net share settlement of equity awards (in shares)		21
Exercise of stock options	68		68
Exercise of stock options (in shares)		38
Repurchases of common stock	(5,710)	$ (2)	(5,708)
Repurchases of common stock (in shares)		(270)
Other comprehensive income, net of tax	17				17
Balances at May. 31, 2018	202,441	$ 355	214,811	(12,109)	(616)
Balances (in shares) at May. 31, 2018		35,507
Balances at Feb. 28, 2018	198,916	$ 357	218,217	(19,459)	(199)
Balances (in shares) at Feb. 28, 2018		35,718
Net income (loss)	7,657
Balances at Aug. 31, 2018	209,736	$ 348	222,981	(12,963)	(630)
Balances (in shares) at Aug. 31, 2018		34,758
Balances at May. 31, 2018	202,441	$ 355	214,811	(12,109)	(616)
Balances (in shares) at May. 31, 2018		35,507
Net income (loss)	(854)			(854)
Equity component of 2025 Convertible Notes, net of tax	51,902		51,902
Purchase of capped call of 2025 Convertible Notes, net of tax	(15,870)		(15,870)
Debt issuance costs of 2025 Convertible Notes allocated to equity, net of tax	(1,649)		(1,649)
Equity component of the repurchased 2020 Convertible Notes	(6,088)		(6,088)
Unwind of note hedges and warrants of 2020 Convertible Notes	3,122		3,122
Stock-based compensation expense	2,680		2,680
Shares issued on net share settlement of equity awards	(3,113)	$ 2	(3,115)
Shares issued on net share settlement of equity awards (in shares)		135
Issuance of shares for restricted stock awards		$ 1	(1)
Issuance of shares for restricted stock awards (in shares)		84
Exercise of stock options	33	$ 1	32
Exercise of stock options (in shares)		17
Repurchases of common stock	(22,854)	$ (11)	(22,843)
Repurchases of common stock (in shares)		(985)
Other comprehensive income, net of tax	(14)				(14)
Balances at Aug. 31, 2018	209,736	$ 348	222,981	(12,963)	(630)
Balances (in shares) at Aug. 31, 2018		34,758
Balances at Feb. 28, 2019	205,653	$ 336	208,205	(2,227)	(661)
Balances (in shares) at Feb. 28, 2019		33,555
Net income (loss)	(8,693)			(8,693)
Stock-based compensation expense	2,543		2,543
Shares issued on net share settlement of equity awards	(219)		(219)
Shares issued on net share settlement of equity awards (in shares)		13
Exercise of stock options	97		97
Exercise of stock options (in shares)		39
Other comprehensive income, net of tax	(269)				(269)
Balances at May. 31, 2019	199,112	$ 336	210,626	(10,920)	(930)
Balances (in shares) at May. 31, 2019		33,607
Balances at Feb. 28, 2019	205,653	$ 336	208,205	(2,227)	(661)
Balances (in shares) at Feb. 28, 2019		33,555
Net income (loss)	$ (16,062)
Exercise of stock options (in shares)	83
Balances at Aug. 31, 2019	$ 193,296	$ 341	213,192	(18,289)	(1,948)
Balances (in shares) at Aug. 31, 2019		34,113
Balances at May. 31, 2019	199,112	$ 336	210,626	(10,920)	(930)
Balances (in shares) at May. 31, 2019		33,607
Net income (loss)	(7,369)			(7,369)
Stock-based compensation expense	3,183		3,183
Shares issued on net share settlement of equity awards	(1,510)	$ 2	(1,512)
Shares issued on net share settlement of equity awards (in shares)		181
Issuance of shares for restricted stock awards		$ 2	(2)
Issuance of shares for restricted stock awards (in shares)		197
Exercise of stock options and contributions to ESPP	898	$ 1	897
Exercise of stock options and contributions to ESPP (in shares)		128
Other comprehensive income, net of tax	(1,018)				(1,018)
Balances at Aug. 31, 2019	$ 193,296	$ 341	$ 213,192	$ (18,289)	$ (1,948)
Balances (in shares) at Aug. 31, 2019		34,113

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FINANCING ARRANGEMENTS (Summary of Liability and Equity Components of Notes, Issuance Costs and Applicable Assumptions Used for Calculation) (Parenthetical) (Details)	Aug. 31, 2019 USD ($)
2020 Convertible Notes [Member]
Debt Instrument [Line Items]
Debt instrument conversion, principal amount of each note converted	$ 1,000
2025 Convertible Notes [Member]
Debt Instrument [Line Items]
Debt instrument conversion, principal amount of each note converted	$ 1,000

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GOODWILL AND OTHER INTANGIBLE ASSETS (Narrative) (Details)	6 Months Ended
	Aug. 31, 2019 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Impairment of intangible assets	$ 0

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OTHER ASSETS (Details)			1 Months Ended				3 Months Ended	6 Months Ended
	Jun. 26, 2019 USD ($) Installment	Mar. 19, 2019 USD ($)	Aug. 31, 2019 USD ($)	Feb. 28, 2019 USD ($)	Aug. 31, 2018 USD ($)	Aug. 24, 2017 USD ($)	Aug. 31, 2018 USD ($)	Aug. 31, 2019 USD ($)
Schedule of Equity Method Investments [Line Items]
Purchase price on acquisition of business								$ 60,634,000
Ownership in cost method investments			$ 561,000	$ 2,263,000				561,000
ThinxNet [Member]
Schedule of Equity Method Investments [Line Items]
Ownership in cost method investments						$ 1,400,000
Unsecured convertible note receivable						$ 1,270,000
Interest rate on notes receivable						6.00%
Notes receivables term						12 months
Accounts receivable due converted into additional ownership interest in an in-kind exchange of assets					$ 300,000
Impairment charges on other assets							$ 326,000
Number of quarterly installments | Installment	3
Quarterly loan amount repayable	$ 423,000
ThinxNet [Member] | ThinxNet GmbH [Member]
Schedule of Equity Method Investments [Line Items]
Loan Repayable Date					Jun. 30, 2019
LoJack Mexico [Member]
Schedule of Equity Method Investments [Line Items]
Purchase price on acquisition of business		$ 14,300,000	$ 1,700,000	$ 2,000,000				$ 12,720,000

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CONCENTRATION OF CUSTOMERS AND SUPPLIERS - Schedule of Significant Customers and Significant Suppliers Concentration Risk Percentage (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Aug. 31, 2019	Aug. 31, 2018	Aug. 31, 2019	Aug. 31, 2018	Feb. 28, 2019
Revenues [Member] | Customer Concentration Risk [Member] | Customer A [Member]
Concentration Risk [Line Items]
Concentration percentage	10.00%	16.00%	12.00%	14.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer A [Member]
Concentration Risk [Line Items]
Concentration percentage			10.00%		14.00%
Inventory Purchases [Member] | Supplier Concentration Risk [Member] | Supplier A [Member]
Concentration Risk [Line Items]
Concentration percentage	28.00%	29.00%	30.00%	29.00%
Inventory Purchases [Member] | Supplier Concentration Risk [Member] | Supplier B [Member]
Concentration Risk [Line Items]
Concentration percentage	13.00%	21.00%	13.00%	21.00%
Inventory Purchases [Member] | Supplier Concentration Risk [Member] | Supplier C [Member]
Concentration Risk [Line Items]
Concentration percentage	11.00%	0.00%	5.00%	0.00%
Accounts Payable [Member] | Supplier Concentration Risk [Member] | Supplier A [Member]
Concentration Risk [Line Items]
Concentration percentage			15.00%		30.00%
Accounts Payable [Member] | Supplier Concentration Risk [Member] | Supplier B [Member]
Concentration Risk [Line Items]
Concentration percentage			12.00%		18.00%

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SEGMENT INFORMATION AND GEOGRAPHIC DATA (Summary of Adjusted EBITDA) (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended		15 Months Ended
	Aug. 31, 2019	May 31, 2019	Aug. 31, 2018	May 31, 2018	Aug. 31, 2019	Aug. 31, 2018	May 31, 2019
Segment Information Summary Of Adjustments Results Of Ebitda Details [Abstract]
Net income (loss)	$ (7,369)	$ (8,693)	$ (854)	$ 8,511	$ (16,062)	$ 7,657
Investment income	(1,256)		(1,007)		(3,337)	(1,860)
Interest expense	5,555		3,767		11,011	6,432
Income tax provision	(1,342)		(497)		(3,599)	1,274
Depreciation	5,191		2,298		9,036	4,341
Amortization of intangible assets	3,318		2,893		6,358	5,641
Stock-based compensation	3,183		2,680		5,726	5,147
Loss on extinguishment of debt			2,033			2,033
Impairment loss and equity in net loss of affiliate			530		530	969
Restructuring charges	2,272		566		2,272	3,949	$ 10,300
Non-recurring legal expenses	777		1,023		4,584	3,137
Acquisition and integration related expenses	46				1,190
Gain on LoJack battery performance legal Settlement						(13,333)
Other	272		257		507	479
Adjusted EBITDA	$ 10,647		$ 13,689		$ 18,216	$ 25,866

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OTHER FINANCIAL INFORMATION (Schedule of Interest Expense) (Parenthetical) (Details)	Aug. 31, 2019	Aug. 31, 2018
2020 Convertible Notes [Member]
Condensed Income Statements, Captions [Line Items]
Interest rate (as a percent)	1.625%	1.625%
2025 Convertible Notes [Member]
Condensed Income Statements, Captions [Line Items]
Interest rate (as a percent)	2.00%	2.00%

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STOCKHOLDERS' EQUITY (Summary of Stock Option Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		6 Months Ended
	Feb. 28, 2019	Aug. 31, 2019
Number of Options
Outstanding, beginning balance		1,054
Granted		171
Exercised		(83)
Forfeited or expired
Outstanding, ending balance	1,054	1,142
Exercisable		717
Weighted Average Exercise Price
Outstanding, beginning balance		$ 13.44
Granted		11.11
Exercised		2.36
Forfeited or expired
Outstanding, ending balance	$ 13.44	13.90
Exercisable		$ 12.20
Weighted average remaining contractual life, Outstanding	5 years 9 months 18 days	6 years 3 months 18 days
Weighted average remaining contractual life, Exercisable		4 years 9 months 18 days
Aggregate intrinsic value, Outstanding		$ 1,349
Aggregate intrinsic value, Exercisable		$ 1,349

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FINANCING ARRANGEMENTS

6 Months Ended

Aug. 31, 2019

Debt Disclosure [Abstract]

FINANCING ARRANGEMENTS

NOTE 7 – FINANCING ARRANGEMENTS

Balances attributable to our financing arrangements consist of the following (in thousands):

	August 31,		February 28,
	2019		2019
2020 Convertible Notes	$	118,199	$	115,249
2025 Convertible Notes		165,001		160,656
Due to Factors under revenue assignment agreements		16,897		-
		300,097		275,905
Less: Current portion		124,181		-
Long-term debt, net of current portion	$	175,916	$	275,905

Revolving Credit Facility

On March 30, 2018, we entered into a revolving credit facility with J.P. Morgan Chase Bank, dated as of March 30, 2018 (the “Credit Agreement”) that provides for borrowings up to $50.0 million. This revolving credit facility expires on March 30, 2020. At our election, the borrowings under this revolving credit facility bear interest at either a LIBOR-based variable rate plus an applicable margin, or at the greater of the Prime Rate, the NYFRB Rate plus an applicable margin rate and one-month LIBOR-based variable rate plus an applicable margin rate (each as defined in the Credit Agreement) determined based on our senior leverage ratio from time to time. The net proceeds available under the revolving credit facility can be used for working capital and general corporate purposes. There were no borrowings outstanding under this revolving credit facility at August 31, 2019.

The revolving credit facility contains certain negative and affirmative covenants including financial covenants that require us to maintain a minimum level of earnings before interest, income taxes, depreciation, amortization and other non-cash charges (Adjusted EBITDA) to interest ratio, a minimum senior indebtedness ratio and a total indebtedness coverage ratio, all measured on a quarterly basis. As of August 31, 2019, we were in compliance with our covenants under the revolving credit facility.

Convertible Senior Unsecured Notes

We have two outstanding convertible senior unsecured notes – a $122.5 million aggregate principal amount of convertible senior unsecured notes due in May 2020 (“2020 Convertible Notes”) and a $230.0 million aggregate principal amount of convertible senior unsecured notes due in August 2025 (“2025 Convertible Notes”, and collectively with the 2020 Convertible Notes, the “Notes”). The Notes are carried at their principal face amount, less unamortized debt discount and issuance costs, and are not adjusted to fair value at each period end.

Accounting guidance requires that convertible debt that can be settled for cash be separated into the liability and equity component at issuance and each be assigned a value. The value assigned to the liability component is the estimated fair value, as of the issuance date, of similar debt without the conversion feature. The difference between the principal amount of the debt and the estimated fair value of the liability component, representing the value of the embedded conversion option assigned to the equity component, is recorded as a debt discount on the issuance date. The fair value of the liability component is generally determined using a discounted cash flow analysis, in which the projected interest and principal payments were discounted back to the issuance date at a market interest rate that represents a Level 3 fair value measurement. The debt discount is amortized to interest expense using the effective interest method with an effective interest rate equal to the aforementioned market interest rate over the term of the debt. The remaining gross proceeds net of the liability component represents the fair value of the embedded conversion feature that was recorded as an increase in additional paid-in capital within the stockholders’ equity section. The associated deferred tax effect was recorded as a reduction of additional paid-in capital. The amounts recorded in additional paid-in capital is not to be remeasured as long as the embedded conversion option continues to meet the conditions for equity classification. As of August 31, 2019, the Notes continue to meet the conditions for equity classification.

Further, the issuance costs related to the debt are also allocated to the liability and equity components based on the relative fair values. Issuance costs attributable to the liability component were recorded as a direct deduction from the carrying value of the debt and are being amortized to expense over the term of the debt using the effective interest method. The issuance costs attributable to the equity component were recorded as a charge to the additional paid-in capital within stockholders’ equity. Lastly, the deferred tax effect related to the equity component of the issuance costs was also recorded to additional paid-in capital as such costs are deductible for tax purposes.

The table below summarizes the liability and equity components of the Notes, the issuance costs and the applicable assumptions used for the calculation (in millions except initial conversion rate and per share amounts):

	2020 Convertible Notes			2025 Convertible Notes
Initial conversion rate (shares per $1,000 principal amount)		36.2398			32.5256
Initial conversion price per share	$	27.5940		$	30.7450
Fair value of liability component upon issuance	$	138.9		$	160.8
Discount Rate		6.20	%		7.56	%
Fair value measurement level	Level 3			Level 3
Fair value of embedded equity component upon issuance	$	33.6		$	69.2
Deferred tax asset effect	$	16.0		$	17.3
Total issuance cost	$	4.3		$	7.3
Equity component	$	1.0		$	2.2
Deferred tax asset effect	$	0.4		$	0.5
Fair value of convertible notes as of August 31, 2019 (Level 2 measurement)	$	120.5		$	183.1

2020 Convertible Notes

In May 2015, we issued $172.5 million aggregate principal amount of the 2020 Convertible Notes, which are senior unsecured obligations and bear interest at a rate of 1.625% per year payable in cash on May 15 and November 15 of each year. The 2020 Convertible Notes mature on May 15, 2020 unless converted earlier or repurchased in accordance with their terms. We may not redeem the 2020 Convertible Notes prior to their stated maturity date and they will be convertible into cash, shares of our common stock or a combination of cash and shares of common stock, at our election, based on an initial conversion rate and initial conversion price as noted above. Holders may convert their 2020 Convertible 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 “2020 Indenture”). During the period from November 15, 2019 to May 13, 2020, holders may convert all or any portion of their 2020 Convertible Notes regardless of the foregoing conditions. Our intent is to settle the principal amount of the 2020 Convertible Notes in cash upon conversion. If the conversion value exceeds the principal amount, we would deliver shares of common stock in respect to the remainder of the 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 our common stock during each period. As of August 31, 2019, none of the conditions allowing holders of the 2020 Convertible Notes to convert have been met as our shares have been trading under the initial conversion price.

The 2020 Indenture contains customary terms and conditions, including that upon certain events of default occurring and continuing, either the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes, by notice to us and the Trustee, may declare 100% of the principal amount of, and accrued and unpaid interest, if any, on all the 2020 Convertible Notes then outstanding to be due and payable immediately. Such events of default include, without limitation, the default by us or any of our subsidiaries with respect to indebtedness for borrowed money in excess of $10 million and the entry of judgments for the payment of $10 million or more against us or any of our subsidiaries which are not paid, discharged or stayed within 60 days.

If we undergo a fundamental change (as defined in the Indenture), holders of the 2020 Convertible Notes may require us to repurchase their Notes at a repurchase price of 100% of the principal amount of the 2020 Convertible 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, we will increase the conversion rate for a holder who elects to convert our 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.

In May 2016, in connection with the 2020 Convertible Notes, we entered into note hedge transactions relating to 6.25 million shares of common stock with certain counterparties. The note hedges represent call options from the counterparties with respect to $172.5 million aggregate principal amount of the 2020 Convertible Notes. We paid $31.3 million for the note hedges and, as a result, approximately $19.3 million, net of tax, was recorded as a reduction to additional paid-in capital within stockholders’ equity.

Separately, we entered into warrant transactions with the same counterparties, giving them the right to acquire the same number of shares of common stock that underlie the 2020 Convertible Notes at a strike price of $39.42 per share which represents a premium of 100% over the last reported sale price of our common stock of $19.71 on April 30, 2015, the date on which the 2020 Convertible Notes were priced. The warrants will be exercisable in equal installments for a period of 80 trading days beginning on August 15, 2020. We received a total amount of $16.0 million in cash proceeds from the sale and issuance of the warrants.

On July 20, 2018, we entered into separate, privately negotiated purchase agreements to repurchase approximately $50 million in aggregate principal amount of our 2020 Convertible Notes for $53.8 million including accrued interest, by using a portion of the net proceeds from the 2025 Convertible Notes. The repurchase is accounted for as an extinguishment of debt, not a modification of debt. We allocated the repurchase price of $53.7 million between the fair value of the liability of $47.6 million and the equity component of $6.1 million as of the repurchase date. The fair value of the liability component was determined using a discounted cash flow analysis at a market interest rate for nonconvertible debt of 4.36% based on the remaining maturity of the 2020 Convertible Notes, which represented a Level 3 fair value measurement. The carrying value of the repurchased notes was $45.6 million, resulting in a loss on extinguishment of debt of $2.0 million. We also received proceeds of $3.1 million from the unwinding of the note hedge and warrants, which was recorded as additional paid-in capital.

2025 Convertible Notes

On July 20, 2018, we issued $230.0 million aggregate principal amount of the 2025 Convertible Notes. These notes were issued under an indenture, dated July 20, 2018 (the “2025 Indenture”) between us and The Bank of New York Mellon Trust Company, N.A., as trustee.

The 2025 Indenture contains customary terms and conditions, including that upon certain events of default occurring and continuing, either the Trustee, by notice to us, or the holders of at least 25% in aggregate principal amount of the then outstanding Notes, by notice to us and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the 2025 Convertible Notes then outstanding to become due and payable immediately. Such events of default include, without limitation, the default by us or any of our subsidiaries with respect to indebtedness for borrowed money in excess of $10 million and the entry of judgments for the payment of $15 million or more against us or any of our subsidiaries, which are not paid, discharged or stayed within 60 days.

The 2025 Convertible Notes bear interest at 2.00% per year payable semiannually in arrears in cash on February 1 and August 1 of each year, beginning on February 1, 2019. The 2025 Convertible Notes will mature on August 1, 2025, unless earlier converted, redeemed or repurchased by us in accordance with their terms. We may redeem the Notes at our option at any time on or after August 6, 2022 at a cash redemption price equal to the principal amount plus accrued interest, but only if the last reported sale price per share of our stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice. The 2025 Convertible Notes rank senior in right of payment to any existing or future indebtedness which is subordinated by its terms, ranks equally in right of payment to any indebtedness that is not so subordinated, is structurally subordinated to all indebtedness and liabilities of our subsidiaries and is effectively junior to our secured indebtedness to the extent of the value of the assets securing such indebtedness.

The 2025 Convertible Notes are convertible into cash, shares of our common stock or a combination of both, at our election, based on an initial conversion rate and initial conversion price as noted above. Holders may convert their 2025 Convertible Notes at their option upon the occurrence of certain events, as defined in the 2025 Indenture.

Upon the occurrence of a “make-whole fundamental change” (as defined in the 2025 Indenture), we will in certain circumstances increase the conversion rate for a specific period of time. Additionally, upon the occurrence of a “fundamental change” (as defined in the 2025 Indenture), holders of the notes may require us to repurchase their notes at a cash repurchase price equal to the principal amount of the notes to be repurchased, plus any accrued and unpaid interest. As of August 31, 2019, none of the conditions allowing the holders of the 2025 Convertible Notes to convert have been met.

In July 2018, in connection with the 2025 Convertible Notes, we entered into capped call transactions with certain option counterparties who were initial purchasers of the 2025 Convertible Notes. The capped call transactions are expected to reduce the potential dilution of earnings per share upon conversion of the 2025 Convertible Notes. Under the capped call transactions, we purchased options relating to 7.48 million shares of common stock underlying the notes, with a strike price equal to the conversion price of the notes and with a cap price equal to $41.3875. We paid $21.2 million for the note hedges and as a result, approximately $15.9 million, net of tax, was recorded as a reduction to additional paid-in capital within stockholders’ equity.

Synovia Revenue Assignments

In conjunction with the acquisition of Synovia on April 12, 2019 (see Note 2), we assumed the rights and obligations under certain revenue assignment arrangements with several financial institutions (the “Factors”). Pursuant to the terms of the arrangements, Synovia sold to the Factors rights to all future revenues of certain subscription contracts on a non-recourse basis for credit approved accounts. The sales price paid represents a percentage of the total contract value (generally 80%) due to Synovia at the beginning of the contract, with the total customer contract balance to be paid by the customers to the Factors over the contract period. The cost of the transaction was recorded as a contra-liability, and was recognized as interest expense over the term of the subscription contract using the effective interest method, while the assigned customer obligation is amortized to subscription revenues using the straight-line method.

These arrangements with the Factors met the criteria in ASC 470-10-25, Sales of Future Revenues or Various Other Measures of Income (“ASC 470”), which relates to cash received from an investor in exchange for a specified percentage or amount of revenue or other measure of income of a particular product line, business segment, trademark, patent, or contractual right for a defined period. Under this guidance, the arrangement qualified as a debt instrument for accounting purposes due to Synovia’s significant continuing involvement in the generation of cash flows due to the Factors. Further, under ASC 805, Business Combination, we recorded the amounts due to the Factors as a debt obligation at fair value in the opening balance sheet and the outstanding amount is presented as part of our long-term debt in our condensed consolidated balance sheet. The fair value of this debt of $19.7 million was determined using a pre-tax cost of debt of 4.7% at the time of our acquisition of Synovia. The discount of $1.5 million will be amortized under the interest method. During the three and six months ended August 31, 2019, we recognized $0.2 million and $0.3 million of interest expense related to this debt, respectively. The revenues recognized from this arrangement were considered a non-cash activity in our condensed consolidated statements of cash flows for the six months ended August 31, 2019.

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EARNINGS PER SHARE

6 Months Ended

Aug. 31, 2019

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 11 - EARNINGS PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) 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 calculation of the basic and diluted income (loss) per share of common stock is as follows (in thousands, except per share value):

	Three Months Ended						Six Months Ended
	August 31,						August 31,
	2019			2018			2019			2018
Net income (loss)	$	(7,369	)	$	(854	)	$	(16,062	)	$	7,657
Basic weighted average number of common shares outstanding		33,568			34,850			33,475			35,141
Effect of stock options and restricted stock units computed on treasury stock method		—			—			-			932
Diluted weighted average number of common shares outstanding		33,568			34,850			33,475			36,073
Earnings (loss) per share:
Basic	$	(0.22	)	$	(0.02	)	$	(0.48	)	$	0.22
Diluted	$	(0.22	)	$	(0.02	)	$	(0.48	)	$	0.21

All outstanding options and restricted stock units for the three and six months ended August 31, 2019 and for the three months ended August 31, 2018 were excluded from the computation of diluted earnings per share because we reported a net loss for each of these periods and the effect of inclusion would be antidilutive.

We have the option to pay cash, issue shares of common stock or any combination thereof for the aggregate amount due upon conversion of the Notes. It is our intent to settle the principal amount of the convertible senior notes with cash, and therefore, we use the treasury stock method for calculating any potential dilutive effect of the conversion option on diluted earnings (loss) per share. From the time of the issuance of the Notes, the average market price of our common stock has been less than the 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.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Aug. 31, 2019	Feb. 28, 2019
Statement Of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	3,000,000	3,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	80,000,000	80,000,000
Common stock, shares issued	34,113,000	33,555,000
Common stock, shares outstanding	34,113,000	33,555,000

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LEASES (Tables)

6 Months Ended

Aug. 31, 2019

Leases [Abstract]

Summary of Lease-related Assets and Liabilities

The table below presents lease-related assets and liabilities recorded on the condensed consolidated balance sheet (in thousands):

	Classification	August 31, 2019
Assets
Operating lease right-of-use assets	Operating lease right-of-use assets	$	27,977
Liabilities
Operating lease liabilities (current)	Other current liabilities	$	6,087
Operating lease liabilities (noncurrent)	Operating lease liabilities		29,780
Total lease liabilities		$	35,867

Summary of Lease Costs Included in Condensed Consolidated Statements of Comprehensive Income (Loss)

The following lease costs were included in our condensed consolidated statements of comprehensive income (loss) as follows (in thousands):

	Three Months Ended August 31, 2019		Six Months Ended August 31, 2019
Operating lease cost	$	1,972	$	3,973
Short-term lease cost		252		564
Variable lease cost		43		73
Total lease cost	$	2,267	$	4,610

Schedule of Supplemental Information Related to Operating Leases

The table below presents supplemental information related to operating leases during the six months ended August 31, 2019 (in thousands, except weighted-average information):

Cash paid for amounts included in the measurement of operating lease liabilities	$	4,067
Right-of-use assets obtained in exchange for new operating lease liabilities	$	3,728
Weighted average remaining lease term	7.4 years
Weighted average discount rate		5.47	%

Schedule of Reconciles the Undiscounted Cash Flows for Operating Lease Liabilities

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheet as of August 31, 2019 (in thousands):

Remainder of 2020	$	3,853
2021		7,208
2022		6,348
2023		6,089
2024		5,728
Thereafter		15,074
Total minimum lease payments		44,300
Less imputed interest		(8,433	)
Present value of future minimum lease payments		35,867
Less current obligations under leases		(6,087	)
Long-term lease obligations	$	29,780

Schedule of Minimum Lease Payments Under Operating Leases with Non-cancellable Terms in Excess of One Year

Minimum lease payments under operating leases with non-cancelable terms in excess of one year as of February 28, 2019, were as follows (in thousands):

2020	$	7,565
2021		6,386
2022		6,242
2023		6,199
2024		6,126
Thereafter		7,659
Total minimum lease payments	$	40,177

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

6 Months Ended

Aug. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Other Intangible Assets

Other intangible assets consist of the following (in thousands):

		Gross						Accumulated Amortization						Effect of Foreign Currency Translation					Net
	Useful Life	Feb. 28, 2019		Addi- tions		Aug. 31, 2019		Feb. 28, 2019		Expense		Aug. 31, 2019		Aug. 31, 2019			Feb. 28, 2019		Aug. 31, 2019		Feb. 28, 2019
Developed technology	2-7 years	$	23,603		3,800	$	27,403	$	18,253	$	1,553	$	19,806		(118	)		—	$	7,479	$	5,350
Tradenames	10 years		40,091		1,600		41,691		12,644		1,958		14,602		(164	)		—		26,925		27,447
Customer lists	4-7 years		25,304		—		25,304		21,307		840		22,147		—			—		3,157		3,997
Dealer and customer relationships	7-12 years		16,850		23,700		40,550		6,908		1,988		8,896		(303	)		—		31,351		9,942
Patents	5 years		589		—		589		160		19		179		—			—		410		429
		$	106,437	$	29,100	$	135,537	$	59,272	$	6,358	$	65,630	$	(585	)	$	-	$	69,322	$	47,165

Schedule of Future Amortization Expense

Estimated future amortization expense as of August 31, 2019 is as follows (in thousands):

2020 (remainder)	$	6,559
2021		11,437
2022		9,803
2023		9,583
2024		6,523
Thereafter		25,417
	$	69,322

Schedule of Goodwill

Changes in goodwill are as follows (in thousands):

	Telematics Systems		Software & Subscription Services			Total
Balance as of February 28, 2019	$	51,203	$	29,602		$	80,805
Acquisition of Synovia and LoJack Mexico (Note 2)		—		23,848			23,848
Effect of exchange rate change on goodwill		—		(564	)		(564	)
Other (1)		—		(52	)		(52	)
Balance as of August 31, 2019	$	51,203	$	52,834		$	104,037

(1) Amount represents adjustment to the preliminary Goodwill from the Tracker UK acquisition.  

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Aug. 31, 2019

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. (referred to herein as “CalAmp”, “the Company”, “we”, “our”, or “us”) is a telematics pioneer leading transformation in a mobile connected economy. We help reinvent businesses and improve lives around the globe with technology solutions that streamline complex Internet of Things (“IoT”) deployments through wireless connectivity solutions and derived data intelligence. Our software applications, scalable cloud services, and intelligent devices collect and assess business-critical data anywhere from mobile assets and their contents. We are a global organization that is headquartered in Irvine, California. We operate under two reportable segments: Telematics Systems and Software & Subscription Services.

On February 25, 2019, we completed our acquisition of Tracker Network (UK) Limited (“Tracker UK”), a LoJack licensee and a market leader in stolen vehicle recovery (“SVR”) telematics services across the United Kingdom, for a cash purchase price of $13.1 million. On March 19, 2019, we completed the acquisition of Car Track, S.A. de C.V. (“LoJack Mexico”), the exclusive licensee of LoJack technology for the Mexican market. We purchased the remaining 87.5% of the LoJack Mexico shares that we did not own for a cash purchase price of $14.3 million. On April 12, 2019, we acquired Synovia Solutions LLC (“Synovia”), a North American market leader in fleet safety and management for K-12 school bus and state and local government fleets for a cash purchase price of $49.8 million. Combined with the recent acquisitions of Tracker UK and LoJack Mexico, the Synovia acquisition expands our fleet management and vehicle safety services portfolio and accelerates our transformation to high-value subscription-based services. See Note 2 for a description of these acquisitions.

Certain notes and other information included in the audited financial statements in our Annual Report on Form 10-K for the fiscal year ended February 28, 2019 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 our 2019 Annual Report on Form 10-K as filed with the U.S. Securities and Exchange Commission on May 1, 2019.

In the opinion of our management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly our financial position at August 31, 2019 and our results of operations for the three and six months ended August 31, 2019 and 2018. The results of operations for such periods are not necessarily indicative of results to be expected for the full fiscal year.

All intercompany transactions and accounts have been eliminated in consolidation.

Revenue Recognition and related judgments

We recognize revenue as follows:

Products. In accordance with ASC 606, we recognize revenue from product sales upon transfer of control of promised products to customers in an amount that reflects the transaction price, which is generally the stand-alone selling prices of the promised goods. For product shipments made on the basis of “FOB Destination” terms, revenue is recorded when the products reach the customer. Customers generally do not have a right of return except for defective products returned during the warranty period. We record estimated commitments related to customer incentive programs as reductions of revenues.

Professional Services. We also provide various professional services to customers. These include project management, engineering services, installation services and an on-going early warning automated notification service, which are typically distinct from other performance obligations and are recognized as the related services are performed. For certain professional service contracts, we recognize revenue based on the proportion of total costs incurred to-date over the estimated cost of the contract, which is an input method.

Software-as-a-Service (“SaaS”). Our SaaS-based subscriptions for our fleet management, vehicle finance and certain other verticals provide our customers with the ability to wirelessly communicate with monitoring devices installed in vehicles and other mobile or remote assets through our software applications. The transaction price for a typical SaaS arrangement includes the price for the hardware, accessories, installation and application subscriptions. Generally, we defer the recognition of revenue for the customized devices that only function with our applications and are sold on an integrated basis with applicable subscriptions. Such customized devices and the application services are not sold separately. In such circumstances, the associated product costs are recorded as deferred costs on the balance sheet. The upfront fees for the devices are not distinct from the subscription service and are combined into the subscription service performance obligation. Generally, these service arrangements do not provide the customer with the right to take possession of the software supporting the subscription service at any time. Revenues from subscription services are recognized ratably, on a straight-line basis, over the term of the subscription. The deferred product revenue and deferred product cost amounts are amortized to application subscriptions and related products and services revenue along with the cost of revenue, respectively, on a straight-line basis over the estimated average in-service lives of these devices, which are three years in the vehicle finance and four years in the fleet management verticals. In certain fleet management contracts, we provide devices as part of the subscription contracts but we retain control of such devices. Under such arrangements, the cost of the devices is capitalized in the property and equipment and depreciated over the estimated useful life of three to five years. The related subscription revenues of these arrangements are recognized as services are rendered. Our deferred revenue also includes prepayments from our customers for various subscription services but does not include future subscription fees associated with customers’ unexercised contract renewal rights. The product revenues for certain customer arrangements are included within the caption Application subscription and related products and services in our statement of comprehensive income (loss) as the products and services are customarily part of one customer contractual arrangement.

In certain customer arrangements, we also sell devices together with monitoring services, for which revenues for the sales of the devices are recognized upon transfer of control to the customer and monitoring services are recognized over the service period as the devices and services are customarily part of one customer contractual arrangement. The allocation of the transaction price is based on estimated stand-alone selling prices for the devices and the monitoring services. The revenues under these arrangements are also included within caption Application subscription and related products and services revenues in our statement of comprehensive income (loss).

Sales taxes. We exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by us from a customer.

Contract Balances. Timing of revenue recognition may differ from the timing on our invoicing to customers. Contract liabilities are comprised of billings or payments received from our customers in advance of performance under the contract. We refer to these contract liabilities as “Deferred Revenues” in the accompanying condensed consolidated financial statements. During the three and six months ended August 31, 2019, we recognized $6.6 million and $14.2 million in revenue from the beginning deferred revenue balance of $51.4 million on March 1, 2019, respectively. Certain incremental costs of obtaining a contract with a customer consist of deferred costs of hardware and sales commissions. The deferred costs of hardware are capitalized and amortized over the estimated useful life of the device on a straight-line basis. Our contract assets are primarily attributed to prepaid sales commissions, which are recognized on a straight-line basis over the life of the corresponding contracts.

We disaggregate revenue from contracts with customers into reportable segments, geography, type of goods and services and timing of revenue recognition. See Note 17 for our revenue by segment and geography. The disaggregation of revenue by type of goods and services and by timing of revenue recognition was as follows (in thousands):

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
Revenue by type of goods and services:
Telematics devices and accessories	$	65,891	$	79,145	$	134,059	$	160,281
Professional services		2,036		1,453		3,983		2,682
Recurring application subscriptions		25,309		15,439		44,264		27,962
Total	$	93,236	$	96,037	$	182,306	$	190,925

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
Revenue by timing of revenue recognition:
Revenue recognized at a point in time	$	65,891	$	79,145	$	134,059	$	160,281
Revenue recognized over time		27,345		16,892		48,247		30,644
Total	$	93,236	$	96,037	$	182,306	$	190,925

Revenues from telematics devices and accessories presented in the table above are sold on a stand-alone basis and recognized at a point in time. Recurring application subscriptions revenues include the amortization for customized devices functional only with application subscriptions.

As of August 31, 2019, we have estimated the remaining performance obligations for contractually committed revenues of $61.9 million, of which we expect to recognize approximately 30% through the remainder of fiscal 2020, 37% in fiscal 2021 and 20% in fiscal 2022.We have utilized the practical expedient exception and exclude contracts that have original durations of less than one year from the aforementioned remaining performance obligation disclosure.

Business Combinations

The purchase price of an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair value at the date of acquisition. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed, such excess is allocated to goodwill. We determine the estimated fair values after review and consideration of relevant information, including discounted cash flows, quoted market prices and other estimates made by management. We may refine the preliminary purchase price allocation, as necessary, during the measurement period of up to one year after the acquisition closing date as we obtain more information as to facts and circumstances existing at the acquisition date impacting the asset valuations and liabilities assumed. Goodwill acquired in business combinations is assigned to the reporting unit expected to benefit from the combination as of the acquisition date. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred.

Cash and Cash Equivalents

We consider all highly liquid investments with maturities at date of purchase of three months or less to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consists of amounts due to us from sales arrangements executed in our normal business activities and are recorded at invoiced amounts. Our payment terms generally range between 30 to 60 days and we do not offer financing options. We present the aggregate accounts receivable balance net of an allowance for doubtful accounts. Generally, collateral and other security is not obtained for outstanding accounts receivable. Credit losses, if any, are recognized based on management’s evaluation of historical collection experience, customer-specific financial conditions as well as an evaluation of current industry trends and general economic conditions. Past due balances are assessed by management on a periodic basis and balances are written off when the customer’s financial condition no longer warrants pursuit of collection. Although we expect to collect amounts due, actual collections may differ from estimated amounts. The allowance for doubtful accounts totaled $3.0 million and $1.8 million as of August 31, 2019 and February 28, 2019, respectively.

Impairment of Goodwill and Other Long-Lived Assets

We evaluate goodwill for impairment on an annual basis in the fourth quarter, or on an interim basis, if we believe indicators of impairment exist. We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we conduct a two-step quantitative goodwill impairment test. The first step of the impairment test involves comparing the fair value of the reporting unit with its carrying value. If the carrying amount of the reporting unit exceeds the reporting unit’s fair value, we perform the second step of the goodwill impairment test. The second step of the goodwill impairment test involves comparing the implied fair value of the reporting unit’s goodwill with the carrying value of the goodwill. The amount by which the carrying value of the goodwill exceeds its implied fair value will be recognized as an impairment loss.

Long-lived assets to be held and used, including identifiable intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. These events or changes in circumstances may include a significant deterioration of operating results, changes in business plans or changes in anticipated future cash flows. If an impairment indicator is present, we evaluate recoverability by a comparison of the carrying amount of the assets or asset group to future undiscounted net cash flows expected to be generated by the lowest level of asset group. Given the interdependencies of revenues across our segments, product and service verticals, and geographies, our asset groups are generally our two operating segments. If the assets or asset group are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets. Fair value is generally determined by estimates of discounted cash flows. The discount rate used in any estimate of discounted cash flows would be the rate required for similar investment of like risk.

Fair Value Measurements

We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in our financial statements. We define 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 arm’s-length transaction between market participants at the measurement date. Fair value is estimated by using the following hierarchy:

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.

Convertible Senior Notes and Capped Call Transactions

We account for our convertible senior notes as separate liability and equity components. We determine the carrying amount of the liability component based on the fair value of a similar debt instrument excluding the embedded conversion option at the issuance date. The carrying amount of the equity component representing the conversion option is calculated by deducting the carrying value of the liability component from the principal amount of the notes as a whole. This difference represents a debt discount that is amortized to interest expense over the term of the notes using the effective interest rate method. The equity component of the notes is included in stockholders’ equity and is not remeasured as long as it continues to meet the conditions for equity classification. We allocate transaction costs related to the issuance of the notes to the liability and equity components using the same proportions as the initial carrying value of the notes. Transaction costs attributable to the liability component are being amortized to interest expense using the effective interest method over the respective term of the notes, and transaction costs attributable to the equity components are netted with the equity component of the note in stockholders’ equity. We account for the cost of the capped calls as a reduction to additional paid-in capital.

Patent Litigation and Other Contingencies

We accrue for patent litigation and other contingencies whenever we determine that an unfavorable outcome is probable and a liability is reasonably estimable. The amount of the accrual is estimated based on a review of each claim, including the type and facts of the claim and our assessment of the merits of the claim. These accruals are reviewed at least on a quarterly basis and are adjusted to reflect the impact of recent negotiations, settlements, court rulings, advice from legal counsel and other events pertaining to the case. Such accruals, if any, are recorded as general and administrative expense in our consolidated statements of comprehensive income (loss). Although we take considerable measures to mitigate our exposure in these matters, litigation is unpredictable; however, we believe that we have valid defenses with respect to pending legal matters against us as well as adequate provisions for probable and estimable losses. All costs for legal services are expensed as incurred.

Foreign Currency Translation

We translate the assets and liabilities of our non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in foreign currency translation included in accumulated other comprehensive income (loss) during the period. The aggregate foreign currency transaction exchange rate gain (losses) included in determining income (loss) before income taxes were immaterial for both the three and six months ended August 31, 2019 and 2018.

Recently Issued Accounting Standards

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”). The amendments in ASU 2018-15 provide guidance to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by this update. The new guidance is effective for our fiscal year 2021 beginning on March 1, 2020. We do not anticipate this pronouncement will have a significant impact on our consolidated financial statements upon adoption.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. This guidance eliminates Step 2 from the goodwill impairment test and instead requires that an entity measure the impairment of goodwill assigned to a reporting unit if the carrying value of assets and liabilities assigned to the reporting unit, including goodwill, exceed the reporting unit's fair value. The new guidance must be adopted for annual and interim goodwill tests by us in fiscal year 2021 beginning on March 1, 2020. After the adoption of this standard, which will be applied prospectively, we will follow a one-step model for goodwill impairment. We do not anticipate this pronouncement will have a significant impact on our consolidated financial statements upon adoption.

In February 2016, the FASB issued ASU 2016-02, Leases, which was further clarified by ASU 2018-10, Codification Improvements to Topic 842, Leases, and ASU 2018-11, Leases – Targeted Improvement, both issued in July 2018. ASU 2016-02 affects all entities that lease assets and establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the income statement. ASU 2018-10 clarifies or corrects unintended application of guidance related to ASU 2016-02. The amendments affect narrow aspects of ASU 2016-02 related to the implicit rate in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. ASU 2018-11 adds a transition option for all entities and a practical expedient only for lessors. The transition option allows entities to not apply the new leases standard in the comparative periods, which they present in their financial statements in the year of adoption. Under the transition option, entities can opt to continue to apply the legacy guidance in ASC 840, “Leases”, including its disclosure requirements, in the comparative periods presented in the year they adopt the new leases standard. Entities that elect this transition option will still be required to adopt the new leases standard using the modified retrospective transition method required by the standard, but they will recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. For leases existing at, or entered into after the beginning of the earliest comparative period presented in the financial statements, lessees and lessors must apply a modified retrospective transition approach.

We applied the transition requirements on the adoption date of March 1, 2019, rather than at the beginning of the earliest comparative period presented. This approach allows for a cumulative effect adjustment in the period of adoption, and prior periods will not be restated. In addition, we elected the package of practical expedients permitted under the transition guidance, which does not require reassessment of prior conclusions related to contracts containing a lease, lease classification and initial direct lease costs. As an accounting policy election, we excluded short-term leases (term of 12 months or less) from the balance sheet presentation and accounted for non-lease and lease components in a contract as a single lease component for certain asset classes. Effective March 1, 2019, we recorded the impact on our condensed consolidated balance sheet from the recognition of ROU asset and lease liability of $29.8 million and $33.2 million, respectively. However, the impact to our condensed consolidated statements of comprehensive income and condensed consolidated statements of cash flows is not material. See Note 9, Leases, for additional details.

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CONCENTRATION OF RISK (Tables)

6 Months Ended

Aug. 31, 2019

Risks And Uncertainties [Abstract]

Schedule of Significant Customers and Significant Suppliers Concentration Risk Percentage

One of our customers accounted for more than 10% of our total revenue and accounts receivable as follows (rounded):

	Three Months Ended August 31,						Six Months Ended August 31,
	2019			2018			2019			2018
Revenues:
Customer A		10	%		16	%		12	%		14	%

	August 31,			February 28,
	2019			2019
Accounts receivable:
Customer A		10	%		14	%

As identified below, some of these manufacturers accounted for more than 10% of our purchases and accounts payable as follows (rounded):

	Three Months Ended August 31,						Six Months Ended August 31,
	2019			2018			2019			2018
Inventory purchases:
Supplier A		28	%		29	%		30	%		29	%
Supplier B		13	%		21	%		13	%		21	%
Supplier C		11	%		0	%		5	%		0	%

	August 31,			February 28,
	2019			2019
Accounts payable:
Supplier A		15	%		30	%
Supplier B		12	%		18	%

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INVENTORIES (Tables)

6 Months Ended

Aug. 31, 2019

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consist of the following (in thousands):

	August 31,		February 28,
	2019		2019
Raw materials	$	22,560	$	14,141
Work in process		3		72
Finished goods		26,978		17,820
	$	49,541	$	32,033

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PRODUCT WARRANTIES

6 Months Ended

Aug. 31, 2019

Product Warranties Disclosures [Abstract]

PRODUCT WARRANTIES

NOTE 15 - PRODUCT WARRANTIES

All products have a one- or two-year limited warranty against manufacturing defects and workmanship. We estimate the future costs relating to product returns subject to our warranty and record a reserve upon shipment of our products. We periodically adjust our estimate for actual warranty claims and historical claims experience as well as the impact of known product operational issues. The warranty reserve is included in Other Current Liabilities in the condensed consolidated balance sheets. Activity in the accrued warranty costs liability is as follows (in thousands):

	Six Months Ended
	August 31,
	2019			2018
Balance at beginning of period	$	1,399		$	5,734
Charged to costs and expenses		1,100			558
Deductions		(700	)		(722	)
Balance at end of period	$	1,799		$	5,570

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Aug. 31, 2019

Accounting Policies [Abstract]

Description of Business

Description of Business

CalAmp Corp. (referred to herein as “CalAmp”, “the Company”, “we”, “our”, or “us”) is a telematics pioneer leading transformation in a mobile connected economy. We help reinvent businesses and improve lives around the globe with technology solutions that streamline complex Internet of Things (“IoT”) deployments through wireless connectivity solutions and derived data intelligence. Our software applications, scalable cloud services, and intelligent devices collect and assess business-critical data anywhere from mobile assets and their contents. We are a global organization that is headquartered in Irvine, California. We operate under two reportable segments: Telematics Systems and Software & Subscription Services.

On February 25, 2019, we completed our acquisition of Tracker Network (UK) Limited (“Tracker UK”), a LoJack licensee and a market leader in stolen vehicle recovery (“SVR”) telematics services across the United Kingdom, for a cash purchase price of $13.1 million. On March 19, 2019, we completed the acquisition of Car Track, S.A. de C.V. (“LoJack Mexico”), the exclusive licensee of LoJack technology for the Mexican market. We purchased the remaining 87.5% of the LoJack Mexico shares that we did not own for a cash purchase price of $14.3 million. On April 12, 2019, we acquired Synovia Solutions LLC (“Synovia”), a North American market leader in fleet safety and management for K-12 school bus and state and local government fleets for a cash purchase price of $49.8 million. Combined with the recent acquisitions of Tracker UK and LoJack Mexico, the Synovia acquisition expands our fleet management and vehicle safety services portfolio and accelerates our transformation to high-value subscription-based services. See Note 2 for a description of these acquisitions.

Certain notes and other information included in the audited financial statements in our Annual Report on Form 10-K for the fiscal year ended February 28, 2019 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 our 2019 Annual Report on Form 10-K as filed with the U.S. Securities and Exchange Commission on May 1, 2019.

In the opinion of our management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly our financial position at August 31, 2019 and our results of operations for the three and six months ended August 31, 2019 and 2018. The results of operations for such periods are not necessarily indicative of results to be expected for the full fiscal year.

All intercompany transactions and accounts have been eliminated in consolidation.

Revenue Recognition and related judgments

Revenue Recognition and related judgments

We recognize revenue as follows:

Products. In accordance with ASC 606, we recognize revenue from product sales upon transfer of control of promised products to customers in an amount that reflects the transaction price, which is generally the stand-alone selling prices of the promised goods. For product shipments made on the basis of “FOB Destination” terms, revenue is recorded when the products reach the customer. Customers generally do not have a right of return except for defective products returned during the warranty period. We record estimated commitments related to customer incentive programs as reductions of revenues.

Professional Services. We also provide various professional services to customers. These include project management, engineering services, installation services and an on-going early warning automated notification service, which are typically distinct from other performance obligations and are recognized as the related services are performed. For certain professional service contracts, we recognize revenue based on the proportion of total costs incurred to-date over the estimated cost of the contract, which is an input method.

Software-as-a-Service (“SaaS”). Our SaaS-based subscriptions for our fleet management, vehicle finance and certain other verticals provide our customers with the ability to wirelessly communicate with monitoring devices installed in vehicles and other mobile or remote assets through our software applications. The transaction price for a typical SaaS arrangement includes the price for the hardware, accessories, installation and application subscriptions. Generally, we defer the recognition of revenue for the customized devices that only function with our applications and are sold on an integrated basis with applicable subscriptions. Such customized devices and the application services are not sold separately. In such circumstances, the associated product costs are recorded as deferred costs on the balance sheet. The upfront fees for the devices are not distinct from the subscription service and are combined into the subscription service performance obligation. Generally, these service arrangements do not provide the customer with the right to take possession of the software supporting the subscription service at any time. Revenues from subscription services are recognized ratably, on a straight-line basis, over the term of the subscription. The deferred product revenue and deferred product cost amounts are amortized to application subscriptions and related products and services revenue along with the cost of revenue, respectively, on a straight-line basis over the estimated average in-service lives of these devices, which are three years in the vehicle finance and four years in the fleet management verticals. In certain fleet management contracts, we provide devices as part of the subscription contracts but we retain control of such devices. Under such arrangements, the cost of the devices is capitalized in the property and equipment and depreciated over the estimated useful life of three to five years. The related subscription revenues of these arrangements are recognized as services are rendered. Our deferred revenue also includes prepayments from our customers for various subscription services but does not include future subscription fees associated with customers’ unexercised contract renewal rights. The product revenues for certain customer arrangements are included within the caption Application subscription and related products and services in our statement of comprehensive income (loss) as the products and services are customarily part of one customer contractual arrangement.

In certain customer arrangements, we also sell devices together with monitoring services, for which revenues for the sales of the devices are recognized upon transfer of control to the customer and monitoring services are recognized over the service period as the devices and services are customarily part of one customer contractual arrangement. The allocation of the transaction price is based on estimated stand-alone selling prices for the devices and the monitoring services. The revenues under these arrangements are also included within caption Application subscription and related products and services revenues in our statement of comprehensive income (loss).

Sales taxes. We exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by us from a customer.

Contract Balances. Timing of revenue recognition may differ from the timing on our invoicing to customers. Contract liabilities are comprised of billings or payments received from our customers in advance of performance under the contract. We refer to these contract liabilities as “Deferred Revenues” in the accompanying condensed consolidated financial statements. During the three and six months ended August 31, 2019, we recognized $6.6 million and $14.2 million in revenue from the beginning deferred revenue balance of $51.4 million on March 1, 2019, respectively. Certain incremental costs of obtaining a contract with a customer consist of deferred costs of hardware and sales commissions. The deferred costs of hardware are capitalized and amortized over the estimated useful life of the device on a straight-line basis. Our contract assets are primarily attributed to prepaid sales commissions, which are recognized on a straight-line basis over the life of the corresponding contracts.

We disaggregate revenue from contracts with customers into reportable segments, geography, type of goods and services and timing of revenue recognition. See Note 17 for our revenue by segment and geography. The disaggregation of revenue by type of goods and services and by timing of revenue recognition was as follows (in thousands):

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
Revenue by type of goods and services:
Telematics devices and accessories	$	65,891	$	79,145	$	134,059	$	160,281
Professional services		2,036		1,453		3,983		2,682
Recurring application subscriptions		25,309		15,439		44,264		27,962
Total	$	93,236	$	96,037	$	182,306	$	190,925

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
Revenue by timing of revenue recognition:
Revenue recognized at a point in time	$	65,891	$	79,145	$	134,059	$	160,281
Revenue recognized over time		27,345		16,892		48,247		30,644
Total	$	93,236	$	96,037	$	182,306	$	190,925

Revenues from telematics devices and accessories presented in the table above are sold on a stand-alone basis and recognized at a point in time. Recurring application subscriptions revenues include the amortization for customized devices functional only with application subscriptions.

As of August 31, 2019, we have estimated the remaining performance obligations for contractually committed revenues of $61.9 million, of which we expect to recognize approximately 30% through the remainder of fiscal 2020, 37% in fiscal 2021 and 20% in fiscal 2022.We have utilized the practical expedient exception and exclude contracts that have original durations of less than one year from the aforementioned remaining performance obligation disclosure.

Business Combinations

Business Combinations

The purchase price of an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair value at the date of acquisition. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed, such excess is allocated to goodwill. We determine the estimated fair values after review and consideration of relevant information, including discounted cash flows, quoted market prices and other estimates made by management. We may refine the preliminary purchase price allocation, as necessary, during the measurement period of up to one year after the acquisition closing date as we obtain more information as to facts and circumstances existing at the acquisition date impacting the asset valuations and liabilities assumed. Goodwill acquired in business combinations is assigned to the reporting unit expected to benefit from the combination as of the acquisition date. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred.

Cash and Cash Equivalents

Cash and Cash Equivalents

We consider all highly liquid investments with maturities at date of purchase of three months or less to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consists of amounts due to us from sales arrangements executed in our normal business activities and are recorded at invoiced amounts. Our payment terms generally range between 30 to 60 days and we do not offer financing options. We present the aggregate accounts receivable balance net of an allowance for doubtful accounts. Generally, collateral and other security is not obtained for outstanding accounts receivable. Credit losses, if any, are recognized based on management’s evaluation of historical collection experience, customer-specific financial conditions as well as an evaluation of current industry trends and general economic conditions. Past due balances are assessed by management on a periodic basis and balances are written off when the customer’s financial condition no longer warrants pursuit of collection. Although we expect to collect amounts due, actual collections may differ from estimated amounts. The allowance for doubtful accounts totaled $3.0 million and $1.8 million as of August 31, 2019 and February 28, 2019, respectively.

Impairment of Goodwill and Other Long-Lived Assets

Impairment of Goodwill and Other Long-Lived Assets

We evaluate goodwill for impairment on an annual basis in the fourth quarter, or on an interim basis, if we believe indicators of impairment exist. We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we conduct a two-step quantitative goodwill impairment test. The first step of the impairment test involves comparing the fair value of the reporting unit with its carrying value. If the carrying amount of the reporting unit exceeds the reporting unit’s fair value, we perform the second step of the goodwill impairment test. The second step of the goodwill impairment test involves comparing the implied fair value of the reporting unit’s goodwill with the carrying value of the goodwill. The amount by which the carrying value of the goodwill exceeds its implied fair value will be recognized as an impairment loss.

Long-lived assets to be held and used, including identifiable intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. These events or changes in circumstances may include a significant deterioration of operating results, changes in business plans or changes in anticipated future cash flows. If an impairment indicator is present, we evaluate recoverability by a comparison of the carrying amount of the assets or asset group to future undiscounted net cash flows expected to be generated by the lowest level of asset group. Given the interdependencies of revenues across our segments, product and service verticals, and geographies, our asset groups are generally our two operating segments. If the assets or asset group are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets. Fair value is generally determined by estimates of discounted cash flows. The discount rate used in any estimate of discounted cash flows would be the rate required for similar investment of like risk.

Fair Value Measurements

Fair Value Measurements

We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in our financial statements. We define 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 arm’s-length transaction between market participants at the measurement date. Fair value is estimated by using the following hierarchy:

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.

Convertible Senior Notes and Capped Call Transactions

Convertible Senior Notes and Capped Call Transactions

We account for our convertible senior notes as separate liability and equity components. We determine the carrying amount of the liability component based on the fair value of a similar debt instrument excluding the embedded conversion option at the issuance date. The carrying amount of the equity component representing the conversion option is calculated by deducting the carrying value of the liability component from the principal amount of the notes as a whole. This difference represents a debt discount that is amortized to interest expense over the term of the notes using the effective interest rate method. The equity component of the notes is included in stockholders’ equity and is not remeasured as long as it continues to meet the conditions for equity classification. We allocate transaction costs related to the issuance of the notes to the liability and equity components using the same proportions as the initial carrying value of the notes. Transaction costs attributable to the liability component are being amortized to interest expense using the effective interest method over the respective term of the notes, and transaction costs attributable to the equity components are netted with the equity component of the note in stockholders’ equity. We account for the cost of the capped calls as a reduction to additional paid-in capital.

Patent Litigation and Other Contingencies

Patent Litigation and Other Contingencies

We accrue for patent litigation and other contingencies whenever we determine that an unfavorable outcome is probable and a liability is reasonably estimable. The amount of the accrual is estimated based on a review of each claim, including the type and facts of the claim and our assessment of the merits of the claim. These accruals are reviewed at least on a quarterly basis and are adjusted to reflect the impact of recent negotiations, settlements, court rulings, advice from legal counsel and other events pertaining to the case. Such accruals, if any, are recorded as general and administrative expense in our consolidated statements of comprehensive income (loss). Although we take considerable measures to mitigate our exposure in these matters, litigation is unpredictable; however, we believe that we have valid defenses with respect to pending legal matters against us as well as adequate provisions for probable and estimable losses. All costs for legal services are expensed as incurred.

Foreign Currency Translation

Foreign Currency Translation

We translate the assets and liabilities of our non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in foreign currency translation included in accumulated other comprehensive income (loss) during the period. The aggregate foreign currency transaction exchange rate gain (losses) included in determining income (loss) before income taxes were immaterial for both the three and six months ended August 31, 2019 and 2018.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”). The amendments in ASU 2018-15 provide guidance to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by this update. The new guidance is effective for our fiscal year 2021 beginning on March 1, 2020. We do not anticipate this pronouncement will have a significant impact on our consolidated financial statements upon adoption.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. This guidance eliminates Step 2 from the goodwill impairment test and instead requires that an entity measure the impairment of goodwill assigned to a reporting unit if the carrying value of assets and liabilities assigned to the reporting unit, including goodwill, exceed the reporting unit's fair value. The new guidance must be adopted for annual and interim goodwill tests by us in fiscal year 2021 beginning on March 1, 2020. After the adoption of this standard, which will be applied prospectively, we will follow a one-step model for goodwill impairment. We do not anticipate this pronouncement will have a significant impact on our consolidated financial statements upon adoption.

In February 2016, the FASB issued ASU 2016-02, Leases, which was further clarified by ASU 2018-10, Codification Improvements to Topic 842, Leases, and ASU 2018-11, Leases – Targeted Improvement, both issued in July 2018. ASU 2016-02 affects all entities that lease assets and establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the income statement. ASU 2018-10 clarifies or corrects unintended application of guidance related to ASU 2016-02. The amendments affect narrow aspects of ASU 2016-02 related to the implicit rate in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. ASU 2018-11 adds a transition option for all entities and a practical expedient only for lessors. The transition option allows entities to not apply the new leases standard in the comparative periods, which they present in their financial statements in the year of adoption. Under the transition option, entities can opt to continue to apply the legacy guidance in ASC 840, “Leases”, including its disclosure requirements, in the comparative periods presented in the year they adopt the new leases standard. Entities that elect this transition option will still be required to adopt the new leases standard using the modified retrospective transition method required by the standard, but they will recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. For leases existing at, or entered into after the beginning of the earliest comparative period presented in the financial statements, lessees and lessors must apply a modified retrospective transition approach.

We applied the transition requirements on the adoption date of March 1, 2019, rather than at the beginning of the earliest comparative period presented. This approach allows for a cumulative effect adjustment in the period of adoption, and prior periods will not be restated. In addition, we elected the package of practical expedients permitted under the transition guidance, which does not require reassessment of prior conclusions related to contracts containing a lease, lease classification and initial direct lease costs. As an accounting policy election, we excluded short-term leases (term of 12 months or less) from the balance sheet presentation and accounted for non-lease and lease components in a contract as a single lease component for certain asset classes. Effective March 1, 2019, we recorded the impact on our condensed consolidated balance sheet from the recognition of ROU asset and lease liability of $29.8 million and $33.2 million, respectively. However, the impact to our condensed consolidated statements of comprehensive income and condensed consolidated statements of cash flows is not material. See Note 9, Leases, for additional details.

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative 1) (Details)	Aug. 31, 2019
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-09-01
Description Of Business And Summary Of Significant Accounting Policies [Line Items]
Revenue, remaining performance obligation expect to recognize in percentage	30.00%
Revenue, remaining Performance obligation, expected timing of satisfaction, year	2020
Revenue, remaining Performance obligation, expected timing of satisfaction, period	6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-03-01
Description Of Business And Summary Of Significant Accounting Policies [Line Items]
Revenue, remaining performance obligation expect to recognize in percentage	37.00%
Revenue, remaining Performance obligation, expected timing of satisfaction, year	2021
Revenue, remaining Performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-03-01
Description Of Business And Summary Of Significant Accounting Policies [Line Items]
Revenue, remaining performance obligation expect to recognize in percentage	20.00%
Revenue, remaining Performance obligation, expected timing of satisfaction, year	2022
Revenue, remaining Performance obligation, expected timing of satisfaction, period	1 year

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OTHER FINANCIAL INFORMATION (Tables)

6 Months Ended

Aug. 31, 2019

Other Financial Information [Abstract]

Schedule of Supplemental Balance Sheet Information

Supplemental Balance Sheet Information

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

	August 31,		February 28,
	2019		2019
Operating lease liabilities (see Note 9)	$	6,087	$	—
Litigation reserve		1,500		1,500
Warranty reserves		1,799		1,398
Accrued restructuring costs (see Note 8)		—		752
Other		5,939		6,972
	$	15,325	$	10,622

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

	August 31,		February 28,
	2019		2019
Deferred revenue	$	30,010	$	27,106
Deferred compensation plan liability		6,643		6,409
Accrued restructuring costs (see Note 8)		-		2,175
Deferred tax liability		1,272		963
Deferred rent		-		365
Other		1,531		1,458
	$	39,456	$	38,476

Schedule of Interest Expense

Supplemental Statement of Comprehensive Income (Loss) Information

Interest expense consists of the following (in thousands):

	Three Months Ended				Six Months Ended
	August 31,				August 31,
	2019		2018		2019		2018
Interest expense on 2020 Convertible Notes:
Stated interest at 1.625% per annum	$	498	$	611	$	996	$	1,312
Amortization of note discount		1,327		1,515		2,620		3,228
Amortization of debt issue costs		168		176		331		394
		1,993		2,302		3,947		4,934
Interest expense on 2025 Convertible Notes:
Stated interest at 2.00% per annum		1,150		511		2,326		511
Amortization of note discount		2,012		839		4,031		839
Amortization of debt issue costs		148		62		297		62
		3,310		1,412		6,654		1,412
Other interest expense		252		53		410		86
Total interest expense	$	5,555	$	3,767	$	11,011	$	6,432

Schedule of Supplemental Cash Flow Information

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

	Six Months Ended
	August 31,
	2019		2018
Interest expense paid	$	3,358	$	1,547
Income tax paid	$	466	$	738

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CASH, CASH EQUIVALENTS AND INVESTMENTS (Parenthetical) (Details) $ in Millions	Aug. 31, 2019 USD ($)
Cash And Cash Equivalents [Abstract]
Cash surrender value of Corporate-Owned Life Insurance (COLI)	$ 2.0

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LEASES (Summary of Lease Costs Included in Condensed Consolidated Statements of Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Aug. 31, 2019	Aug. 31, 2019
Lease Cost [Abstract]
Operating lease cost	$ 1,972	$ 3,973
Short-term lease cost	252	564
Variable lease cost	43	73
Total lease cost	$ 2,267	$ 4,610

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INCOME TAXES (Narrative) (Details) $ in Millions	6 Months Ended
	Aug. 31, 2019 USD ($)
Income Tax Disclosure [Abstract]
Income tax benefit attributable to reduction in unrecognized tax benefits	$ 0.6