SEGMENT INFORMATION

As of the fiscal quarter ended June 30, 2017, we determined that we now have two reportable operating segments for purposes of ASC 280-10-50 “Segments Reporting”:


•	M2M segment; and


•	Solutions segment.

This determination was made by considering both qualitative and quantitative information. The qualitative information considered during the quarter ended June 30, 2017 included, but was not limited to, the following: the nature of the products and services and customers differ between the two segments, the Chief Operating Decision Maker (“CODM”) started reviewing both segments’ operating results separately and now makes decisions about the allocation of resources, and discrete financial information is available through operating income (loss) for both segments. During the third quarter of fiscal 2017, the recently acquired Solutions entities financial systems were integrated allowing for the review of discrete financial information for the Solutions segment. In addition, based on current expectations, we now expect the Solutions segment to meet the quantitative thresholds for a separate reporting segment. The financial results of the Solutions entities were previously considered not to meet the quantitative thresholds for a separate reporting segment.

9. SEGMENT INFORMATION (CONTINUED)

Our segments are described below:

M2M

Our M2M segment is composed of:


•	Cellular routers and gateways;


•	Radio frequency (“RF”) which include our XBee^® modules as well as other RF solutions;


•	Embedded products include Digi Connect^® and Rabbit^® embedded systems on module and single board computers;


•	Network products, which has the highest concentration of mature products, including console and serial servers and USB connected products;


•	Wireless design services;


•	Digi Remote Manager^®; and


•	Support services which offers various levels of technical services for development assistance, consulting and training.

Solutions

Our Solutions segment was formed through the January 2017 acquisition of SMART Temps, LLC (“SMART Temps”), the November 2016 acquisition of FreshTemp, LLC (“FreshTemp”) and the October 2015 acquisition of Bluenica Corporation, which we renamed SafeTemps. These businesses provide automated monitoring and reporting solutions to food service, transportation and logistics, and healthcare and pharmaceutical companies.

We measure our segment results primarily by reference to revenue and operating income (loss). Certain costs incurred at the corporate level are allocated to our segments. These costs include information technology, employee benefits and shared facility services. The information technology and shared facility costs are allocated based on headcount and the employee benefits costs are allocated based on compensation costs.

Summary operating results for each of our segments were as follows (in thousands):



	Three months ended June 30,						Nine months ended June 30,
	2017			2016			2017			2016
Revenue
M2M	$	42,845		$	51,868		$	131,653		$	152,110
Solutions	2,894			262			4,876			441
Total revenue	$	45,739		$	52,130		$	136,529		$	152,551
Operating income (loss)
M2M	$	1,541		$	5,698		$	6,831		$	13,333
Solutions	(832		)	(573		)	(2,188		)	(1,266		)
Total operating income (loss)	$	709		$	5,125		$	4,643		$	12,067
Depreciation and amortization
M2M	$	904		$	1,018		$	2,704		$	3,125
Solutions	735			138			1,325			407
Total depreciation and amortization	$	1,639		$	1,156		$	4,029		$	3,532

Total expended for property, plant and equipment was as follows (in thousand):



	Nine months ended June 30,
	2017		2016
Expended for property, plant and equipment
M2M	$	1,545	$	1,496
Solutions	32		88
Total expended for property, plant and equipment	$	1,577	$	1,584

9. SEGMENT INFORMATION (CONTINUED)

Total assets for each of our segments were as follows (in thousands):



	June 30, 2017		September 30, 2016
Assets
M2M	$	184,460	$	184,917
Solutions	47,949		13,599
Unallocated*	111,293		137,650
Total assets	$	343,702	$	336,166

*Unallocated consists of cash and cash equivalents, current marketable securities and long-term marketable securities.