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

FORM 10-K

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

FOR THE FISCAL YEAR ENDED FEBRUARY 28, 201329, 2016

COMMISSION FILE NUMBER: 0-12182
____________________

________________

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

Delaware95-3647070
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
 
1401 N. Rice Avenue

15635 Alton Parkway, Suite 250

Oxnard,

Irvine, California

9303092618
(Address of principal executive offices)(Zip Code)


REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:(805) 987-9000
____________________

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:(949) 600-5600
________________
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE
NoneNoneNone

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
       $.01$.01 par value Common Stock Nasdaq Global Select Market
(Title of Class)      (Name(Name of each exchange on which registered)


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes [   ] No [X].

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   Yes [   ] No [X].

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 [X] No [   ].

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes [X] No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.   (Check one):

Large accelerated filer [   ]Accelerated filer [X]Non-accelerated filer [   ]Smaller Reporting Company [   ]
(Do not check if a smaller reporting company)

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

The aggregate market value of voting and non-voting common stock held by non-affiliates of the registrant as of August 25, 201231, 2015 was approximately $184,430,000.$586,651,000. As of April 15, 2013,March 31, 2016, there were 35,051,61836,674,631 shares of the Company's common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company's definitive Proxy Statement for the Annual Meeting of Stockholders to be held on July 25, 201326, 2016 are incorporated by reference into Part III, Items 10, 11, 12, 13 and 14 of this Form 10-K. This Proxy Statement will be filed within 120 days after the end of the fiscal year covered by this report.


PART I

ITEM 1. BUSINESS

OUR COMPANY

We are a leading provider of wireless communications solutions for a broad array of applications to customers globally. Our business activities are organized into our Wireless DataCom and Satellite business segments.

WIRELESS DATACOM

Our Wireless DataCom segment offers solutions to address the markets for Machine-to-Machine, or M2M, communications, Mobile Resource Management or MRM,(MRM) applications, the broader Machine-to-Machine (M2M) communications space and other emerging applicationsmarkets that require connectivity anytime and everywhere connectivity.anywhere. Our M2M and MRM solutions enable customers to optimize their operations by collecting, monitoring and efficiently reporting business-critical data and desired intelligence from high-value remote and mobile assets. Our extensive portfolio of intelligent communications devices, scalable cloud servicesservice enablement platforms, and targeted software applications streamline otherwise complex M2M or MRM deployments for our customers. We are focused on delivering products, software services and solutions globally in our corefor energy, government, heavy equipment, transportation and automotive vertical markets in Energy, Government and Transportation.markets. In addition, we anticipate significantnew opportunities and future opportunitiesgrowth for adoption of our M2MMRM and MRMM2M solutions in Construction, Miningheavy equipment, trucking and Usage-Based Automobile Insurance vertical markets,transportation, machine telematics, remote monitoring and control and various aftermarket automotiveand connected car applications, including insurance telematics, as well as other emerging applications in additional markets.

Our broad portfolio of wireless communications products includes asset tracking devices, targeted telematics platforms,mobile telemetry units, fixed and mobile wireless gateways and full-featured and multi-mode wireless routers. These wireless networking elements underpin a wide range of proprietaryboth CalAmp and third party M2M and MRM solutions worldwide and are well-suitedideal for applications demanding reliable, connectivity.business-critical communications. Our portfolio ofMRM and M2M and MRM devices hashave been widely deployed with approximately 2more than six million devices currently in service around the world. We believeOur customers select our products based on their performance, optimized feature sets, configurability, manageability, long-term support, reliability and, in particular,overall value. We believe that ourOur deep understanding of theour customers’ dynamic needs and the dynamics of our customers and their respective vertical markets, applications and applications arebusiness requirements remain key differentiators for CalAmp.us.

In addition to our comprehensive productdevice portfolio, we offer scalable cloud-based telematics Platform-as-a-Service (PaaS) and targeted Software-as-a-Service (SaaS) applications that generate recurring subscription revenues for our Wireless DataCom segment. Our cloud-based softwareservice enablement and telematics platforms facilitate integration of legacy andour own applications, as well as those of third party applicationsparties, through simple Application ProtocolProgramming Interfaces or APIs,(APIs), which enable our partners leverage to rapidly deliver full-featured MRM and customers to quickly bring full-featured M2M and MRM solutions to market.their customers and markets. By leveraging comprehensive device managementcapabilities from our cloud-based device management platform, everyofferings, any connected CalAmp device can be remotely managed, configured and upgraded throughout the entire deployment lifecycle. These solutions also easily integrateAlready integrated with wireless telecommunications carriers’ networknumerous global Mobile Network Operator (MNO) account management systems, our proven commercial platforms allowingwere architected to leverage these carrier backend systems to provide our customers access to services that are essential tofor creating and supporting a comprehensivedynamic end-to-end solution.solutions.

Our portfolio of connected devices is configured to report data on a user-defined basis seamlessly to new or existing software applications. We have a proven, scalable and targeted Software-as-a-Service, or SaaS businessofferings and related core competency. Our SaaS delivery model for our MRM applications enablescompetencies enable rapid and cost-effective deployment of high valuehigh-value solutions for our customers and providesprovide an opportunity to incrementally grow our recurring revenues. Over the last several years, we have steadily grown our base of PaaS and SaaS subscribers. Our acquisition of the Wireless Matrix business, discussed in greater detail below, will further expand our SaaS offeringssubscribers both organically and is expected to grow this subscriber base and recurring revenues.through acquisitions.

The solutions offered through our Wireless DataCom segment address a wide variety of applications across key vertical markets. These markets are typically characterized by large enterprises with significant remote and/or mobile assets that perform business-critical tasks and services are expensive to deploy and operate, and are otherwise difficult to manage in real time or near real time. In such situations, our solutions provide a clear and demonstrable return on investment. Our solutions enable customers to optimize their operations by collecting, monitoringproducts and efficiently reporting business-critical data and desired intelligence from these high-value remote and mobile assets. We believe our solutions benefit our customers in the following ways:



Wireless Matrix Acquisition

On March 4, 2013, we completed the acquisition of all the outstanding capital stock of Wireless Matrix USA, Inc. (“Wireless Matrix”). Under the terms of the agreement, we acquired Wireless Matrix for a cash payment of $52.9 million, subject to adjustment. The assets we acquired included cash of approximately $6 million.

    This strategic acquisition is consistentprovide global customers with our long-term growth strategy and strengthens our position as a leading provider of integrated wireless communications devices and software solutions for M2M and MRM deployments within our core industry vertical markets. We expect to leverage Wireless Matrix’s mobile workforce management and asset trackingconnected vehicle applications to build upon our current product offerings for customershelp ensure that retail auto dealers remain competitive and relevant in Energy, Government and Transportation verticaltoday’s rapidly evolving markets. We also believe an opportunity exists to expand our turnkey offerings to global enterprise customers in new vertical markets such as Construction, Agriculture and Mining, among others. We further believe that the Wireless Matrix acquisition will accelerate our development roadmap and enable us to offer higher margin turnkey solutions for new and existing customers and to further increase our relevance with mobile network operators and key channel partners in the global M2M marketplace. We anticipate that the Wireless Matrix transaction will result in a meaningful increase in our subscription and SaaS-based revenues on both an absolute basis and as a percent of total revenues.

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SATELLITE

Our Satellite segment develops, manufactures and sells direct-broadcast satellite (“DBS”)(DBS) outdoor customer premise equipment and whole home video networking devices forenabling the delivery of digital and high definition satellite television services. Our satellite products are sold primarily to EchoStar, an affiliate of Dish Network, for incorporation into complete subscription satellite television systems.

Subsequent to the end of fiscal 2016, EchoStar notified us that, as a result of a consolidation of its supplier base in specific areas of its business to better align with its future requirements and its reduced demand for the products that we currently supply, it has determined that it will discontinue purchasing products from CalAmp at the end of the current product demand forecast. EchoStar’s current product demand forecast extends through August 2016. As a result of EchoStar’s decision, we expect sales to this customer will cease after the second quarter of fiscal 2017. We are currently evaluating our Satellite business, but in light of the fact that EchoStar accounts for essentially all of the revenue of our Satellite segment, we expect that this portion of our operations will be discontinued during fiscal 2017. We do not believe that the loss of EchoStar as a customer will have a material adverse effect on our business.

For financial information about our operating segments and geographic areas, refer to Note 16 of Notes to Consolidated Financial Statements set forth in Part II, “Item 8. Financial Statements and Supplementary Data” of this report, incorporated herein by reference.

MANUFACTURING

Electronic devices, components and made-to-order assemblies used in our products are generally obtained from a number of suppliers, although certain components are obtained from sole source suppliers. Some devices or components are standard items while others are manufactured to our specifications by itsour suppliers. The Company believes that most raw materials are available from alternative suppliers. However, any significant interruption in the delivery of such items, particularly those that are sole source materials or components, could have an adverse effect on the Company's operations.



We outsource printed circuit board assembly, system subassembly and testing, as well as full turn-key production of some products, to contract manufacturers in the Pacific Rim. Historically,We continue to increase this outsourcing effort to maintain flexibility and remain competitive on product costs. In addition, in fiscal 2014 we have performed final assembly and final test ofadded a new contract manufacturer to our satellite products andsupply base. This enables us to dual source some Wireless DataCom products at our principal facility in Oxnard, California. However, during fiscal 2012, we transitioned our principal satellite products to full turnkey production by off-shore contractors.product manufacturing.

A substantial portion of our products, components and subassemblies are procured from foreign suppliers and contract manufacturers located primarily in Hong Kong, and mainland China, Taiwan and other Pacific Rim countries. Any significant shift in U.S. trade policy toward these countries, or a significant downturn in the economic or financial condition of or any political instability in these countries, could cause disruption of the Company’s supply chain or otherwise disrupt the Company’s operations, which could adversely impact the Company’s business.

ISO 9001 INTERNATIONAL CERTIFICATION

We became registered to ISO 9001:1994 in 1995. We upgraded our registration to ISO 9001:2000 in 2003, and upgraded once again to ISO 9001:2008 in 2010. ISO 9001:2008 is the widely recognized international standard for quality management in product design, manufacturing, quality assurance and marketing. We believe that ISO certification is important to our operations because most of our key customers expect their suppliers to have and maintain ISO certification. Registration assessments are performed by Underwriters Laboratories Inc. ("UL") accordingcertified to the ISO (International Organization for Standardization) 9001:2008 International Standard. We continually perform internal audits to ensure compliance with this qualityQuality management systems standard. In addition, UL performs an annual external Compliance Assessment, with the next assessment scheduled for July 2013. We have maintained our ISO certification through each Compliance Assessment. Every three years, UL performs a full system RecertificationAssessment. The next Recertification Assessment is scheduled for July 2015.

RESEARCH AND DEVELOPMENT

Each of the markets in which we compete is characterized by rapid technological change, evolving industry standards and new product features to meet market requirements. During the last three years, we have focused our research and development resources primarily on wireless communication systems for heavy equipment, fleet management, utilities public safety and industrial monitoring and controls for mobile and fixed location IP data communication applications, GPS and cellular tracking products and services for MRM applications, and satellite DBS products. In fiscal 2016, we have also focused our research and development resources on connected car solutions, vehicle telematics, and crash detection and discrimination. We have developed key technology platforms that can be leveraged across many of our businesses and applications. These include cloud-based telematics application enablement software platforms and the end-user software applications, cellular and satellite communications technology platforms based on proprietary licensed narrowband UHFnetwork-based asset tracking units, and VHF frequency radios3G and modems, standards-based unlicensed4G broadband wireless IP router/radio modems,router products for fixed and cellular-network based tracking units.mobile applications. In addition, development resources have been allocated to broadening existing product lines, reducing product costs, and improving performance through product redesign efforts.

Research and development expenses in fiscal years 2013, 20122016, 2015 and 20112014 were $14,291,000, $11,328,000,$19,803,000, $19,854,000 and $11,125,000,$21,052,000, respectively. During this three-year period, our research and development expenses have ranged between 8%7% and 10%9% of annual consolidated revenues.

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SALES AND MARKETING

Our revenues are derived mainly from customers in the United States, which represented 82%83%, 89%,79% and 91%81% of consolidated revenues in fiscal 2013, 2012years 2016, 2015 and 2011,2014, respectively.

Our Wireless DataCom segment sells its products and services through dedicated direct and indirect sales channels with employees distributed across the U.S. The Wireless DataCom segment’s sales and marketing activities are supported internationally with sales personnel in Latin America, Israelthe Middle East and the United Kingdom.Europe.

Our Satellite segment sells its products primarily to Echostar,EchoStar, an affiliate of Dish Network, for incorporation into complete subscription satellite television systems. The sales and marketing functions for the Satellite segment are located at our corporate headquartersfacility in Oxnard, California.



    Customers that accounted for 10% or more of consolidated annual sales in any one of the last three years are as follows:

Year Ended February 28,
     Customer     Segment2013     2012     2011
EchoStarSatellite22.1% 28.3%31.0%

    EchoStar serves the North American DBS market. We believe that the loss of Echostar as a customer could have a material adverse effect on our financial position and results of operations.

COMPETITION

Our markets are highly competitive. In addition, if the markets for our products grow, we anticipate increased competition from new companies entering such markets, some of whom may have financial and technical resources substantially greater than ours. We believe that competition in our markets is based primarily on performance,innovation, reputation, reliability, responsiveness and price. Our continued success in these markets will depend in part upon our ability to continue to innovate, design quality products and deploy services at competitive prices and provide superior servicesupport to our customers.

Wireless DataCom

We believe that the principal competitors for our wireless products and services include Motorola Solutions, GE,Danlaw, Freewave, General Electric, GenX, Spireon, Novatel Wireless, Xirgo,Geotab, Meteorcomm, Mobile Devices, Sierra Wireless, Silver Spring Networks, Digi International, Trimble NavigationSpireon, Telogis, Xirgo and Freewave.Zonar Systems.

Satellite

We believe that the principal competitors for our DBS products include Global Invacom, Microelectronics Technology, Sharp and Wistron NeWeb Corporation, Microelectronics Technology, and Global Invacom.Corporation. Because we are typically not the sole source supplier of our satelliteDBS products, we are exposed to ongoing price and margin pressures in this business.

BACKLOG

    Our products are soldTotal backlog as of February 28, 2016 and 2015 was $57.6 million and $51.7 million, respectively. Substantially all of the backlog is expected to customers that generally do not enter into long-term purchase agreements, and as a result our backlog at any given date is not generally significantbe converted to sales in relation to our annual sales. In addition, because of customer order modifications, cancellations, or orders requiring wire transfers or letters of credit from international customers, our backlog at any point in time may not be indicative of sales for any future period.fiscal 2017.

INTELLECTUAL PROPERTY

Patents

At February 28, 2013,2016, we had 1930 U.S. patents and 116 foreign patents in our Wireless DataCom business. In addition to our awarded patents, we have 1213 patent applications in process.

Trademarks

CalAmp and Dataradio are among the federally registered trademarks of the Company.

EMPLOYEES

At February 28, 2013,2016, we had approximately 340415 employees and approximately 4075 contracted production workers. None of our employees or contract workers are represented by a labor union. The contracted production workers are engaged through independent temporary labor agencies.

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EXECUTIVE OFFICERS

The executive officers of the Company are as follows:

NAME AGEPOSITION
Michael Burdiek 5356 President and Chief Executive Officer
Garo Sarkissian4649Senior Vice President, Corporate Development
Richard Vitelle5962Executive Vice President, Finance, Chief Financial Officer and Corporate Secretary



MICHAEL BURDIEK joined the Company as Executive Vice President in June 2006 and was appointed President of the Company's Wireless DataCom segment in March 2007. Mr. Burdiek was appointed Chief Operating Officer in June 2008 and was promoted to President and COO in April 2010. In June 2011, he was promoted to CEO and was appointed to the Company’s Board of Directors. Prior to joining the Company, Mr. Burdiek was the President and CEO of Telenetics Corporation, a publicly held manufacturer of data communications products. From 2004 to 2005, he worked as an investment partner and advisor in the private equity sector. From 1987 to 2003, Mr. Burdiek held a variety of technical and generalexecutive management positions with Comarco, Inc., a publicly held company, most recently as Senior Vice President and General Manager of Comarco's Wireless Test Systems unit.company. Mr. Burdiek began his career as a design engineer with Hughes Aircraft Company.

GARO SARKISSIAN joined the Company in 2005 and currently serves as Senior Vice President, Corporate Development. Prior to joining the Company, from 2003 to 2005 he served as Principal and Vice President of Business Development for Global Technology Investments (GTI), a private equity firm. Prior to GTI, from 1999 to 2003, Mr. Sarkissian held senior management and business development roles at California Eastern Laboratories, a private company developing and marketing radio frequency (RF), microwave and optical components. Mr. Sarkissian began his career as an RF engineer in 1988 and developed state-of-the-art RF power products over a span of 10 years for M/A Com and NEC.

RICHARD VITELLE joined the Company in 2001 and currently serves as Executive Vice President, CFO and Secretary/Treasurer. Prior to joining the Company, he served as Vice President of Finance and CFO of SMTEK International, Inc., a publicly held electronics manufacturing services provider, where he was employed for a total of 11 years. Earlier in his career, Mr. Vitelle served as a senior manager with Price Waterhouse.

The Company's executive officers are appointed by and serve at the discretion of the Board of Directors.

AVAILABLE INFORMATION

The Company's primary Internet address is www.calamp.com. The Company makes its Securities and Exchange Commission ("SEC")(SEC) periodic reports (Forms 10-Q and Forms 10-K) and current reports (Forms 8-K) available free of charge through its website as soon as reasonably practicable after they are filed electronically with the SEC. Within the Investors section of our website, we provide information concerning corporate governance, including our Corporate Governance Guidelines, Board committee charters and composition, Code of Business Conduct and Ethics, and other information. The content of our website is not incorporated by reference into this Annual Report on Form 10-K or into any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.

Materials that the Company files with the SEC may be read and copied at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding the Company that the Company files electronically with the SEC.

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ITEM 1A. RISK FACTORS

We operate in a rapidly changing environment that involves a number of risks and uncertainties, some of which are beyond our control. The following list describes several risk factors which are applicable to our Company:

The Company is dependent on a significant customer,and speaks as of the lossdate of whichthis document. These and other risks could have a material adverse effect on the Company’s future sales and its ability to grow.

    EchoStar accounted for 22%our business, results of the Company’s consolidated revenues for fiscal 2013. The loss of EchoStar as a customer, a deterioration in its overall business, or a decrease in its volume of sales, could result in decreased sales for us and could have a material adverse impact on our ability to grow our business. A substantial decrease or interruption in business from this key customer could result in write-offs or in the loss of future business and could have a material adverse effect on the Company’s business,operations, financial condition, or results of operations.and cash flows:

We do not currently have long-term contracts with customers and our customers may cease purchasing products at any time, which could significantly harm our revenues.

We generally do not have long-term contracts with our customers. As a result, our agreements with our customers do not currently provide us with any assurance of future sales. These customers can cease purchasing products from us at any time without penalty, they are free to purchase products from our competitors, they may expose us to competitive price pressure on each order and they are not required to make minimum purchases. Any of these actions taken by our customers could have a material adverse effect on the Company’s business, financial condition or results of operations.



Because the markets in which we compete are highly competitive and many of our competitors have greater resources than us, we cannot be certain that our products will continue to be accepted in the marketplace or capture increased market share.

The marketmarkets for our products isand services are intensely competitive and characterized by rapid technological change, evolving standards, short product life cycles, and price erosion. We expect competition to intensify as our competitors expand their product offerings and new competitors enter the market. Given the highly competitive environment in which we operate, we cannot be sure that any competitive advantages currently enjoyed by our products and services will be sufficient to establish and sustain our products and services in the market.markets we serve. Any increase in price or other competition could result in erosion of our market share, to the extent we have obtained market share, and could have a negative impact on our financial condition and results of operations. We cannot provide assurance that we will have the financial resources, technical expertise or marketing and support capabilities to compete successfully.

Information about the Company’s competitors is included in Part I, Item 1 of this Annual Report on Form 10-K under the heading "COMPETITION"“COMPETITION”.

Our business is subject to many factors that could cause our quarterly or annual operating results to fluctuate and our stock price to be volatile.

Our quarterly and annual operating results have fluctuated in the past and may fluctuate significantly in the future due to a variety of factors, many of which are outside of our control. Some of the factors that could affect our quarterly or annual operating results include:

  • ●

    the timing and amount, of, or cancellation or rescheduling, of orders for our products or services;

    ●

    our ability to develop, introduce, ship and support new products and product enhancements and manage product transitions;

    ●

    announcements of new product and service introductions and reductions in the price of products and services offered by our competitors;

    ●

    our ability to achieve cost reductions;

    ●

    our ability to obtain sufficient supplies of sole or limited source components for our products;

    ●

    our ability to achieve and maintain production volumes and quality levels for our products;

    ●

    our ability to maintain the volume of products sold and the mix of distribution channels through which they are sold;

    ●

    the loss of any one of our major customers or a significant reduction in orders from those customers;

    ●

    increased competition, particularly from larger, better capitalized competitors;

    ●

    fluctuations in demand for our products and services; and

    ●

    telecommunications and wireless market conditions specifically and economic conditions generally.

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  • our ability to develop, introduce, ship and support new products and product enhancements and manage product transitions;
  • announcements, new product introductions and reductions in the price of products offered by our competitors;
  • our ability to achieve cost reductions;
  • our ability to obtain sufficient supplies of sole or limited source components for our products;
  • our ability to achieve and maintain production volumes and quality levels for our products;
  • our ability to maintain the volume of products sold and the mix of distribution channels through which they are sold;
  • the loss of any one of our major customers or a significant reduction in orders from those customers;
  • increased competition, particularly from larger, better capitalized competitors;
  • fluctuations in demand for our products and services; and
  • telecommunications and wireless market conditions specifically and economic conditions generally.

Due in part to factors such as the timing of product release dates, purchase orders and product availability, significant volume shipments of products could occur close to the end of a fiscal quarter. Failure to ship products by the end of a quarter may adversely affect operating results. In the future, our customers may delay delivery schedules or cancel their orders without notice. Due to these and other factors, our quarterly revenue, expenses and results of operations could vary significantly in the future, and period-to-period comparisons should not be relied upon as indications of future performance.



Because some of our components, assemblies and electronics manufacturing services are purchased from sole source suppliers or require long lead times, our business is subject to unexpected interruptions, which could cause our operating results to suffer.

Some of our key components are complex to manufacture and have long lead times. Also, our DBS products are manufactured by a single subcontractor, and an alternative supply source may not be readily available. In the event of a reduction or interruption of supply, or degradation in quality, it could take up to six months to begin receiving adequate supplies from alternative suppliers, if any. As a result, product shipments could be delayed and revenues and results of operationsprofitability could suffer. Furthermore, if we receive a smaller allocation of component parts than is necessary to manufacture products in quantities sufficient to meet customer demand, customers could choose to purchase competing products and we could lose market share. Any of these events could have a material adverse effect on the Company’s business, financial condition or results of operations.

If we do not meet product introduction deadlines, our business could be adversely affected.

In the past, we have experienced design and manufacturing difficulties that have delayed the development, introduction or marketing of new products and enhancements and which caused us to incur unexpected expenses. In addition, some of our existing customers have conditioned their future purchases of our products on the addition of new product features. In the past, we have experienced delays in introducing some new product features. Furthermore, in order to compete in some markets, we will have to develop different versions of existing products that operate at different frequencies and comply with diverse, new or varying governmental regulations in each market. Our inability to develop new products or product features on a timely basis, or the failure of new products or product features to achieve market acceptance, could adversely affect our business.

If demand for our products and services fluctuates rapidly and unpredictably, it may be difficult to manage theour business efficiently, which may result in reduced gross margins and profitability.

Our cost structure is based in part on our expectations for future demand. Many costs, particularly those relating to capital equipment and manufacturing overhead, are relatively fixed. Rapid and unpredictable shifts in demand for our products and services may make it difficult to plan production capacity and business operations efficiently. If demand is significantly below expectations, we may be unable to rapidly reduce these fixed costs, which can diminish gross margins and cause losses. A sudden downturn may also leave us with excess inventory, which may be rendered obsolete if products and services evolve during the downturn and demand shifts to newer products.products and services. Our ability to reduce costs and expenses may be further constrained because we must continue to invest in research and development to maintain our competitive position and to maintain service and support for our existing customer base. Conversely, in the event of a sudden upturn, we may incur significant costs to rapidly expedite delivery of components, procure scarce components and outsource additional manufacturing processes. These costs could reduce our gross margins and overall profitability. Any of these results could adversely affect our business.business, financial condition or results of operations.

Because we currently sell, and we intend to grow the sales of, certain of our products and services in countries other than the United States, we are subject to different regulatory policies. We may not be able to develop products and services that comply with the standards of different countries, which could result in our inability to sell our products and, further, we may be subject to political, economic, and other conditions affecting such countries, which could result in reduced sales of our products and services and which could adversely affect our business.

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If our sales are to grow in the longer term, we believe we must grow our international business. Many countries require communications equipment used in their country to comply with unique regulations, including safety regulations, radio frequency allocation schemes and standards. If we cannot develop products that work with different standards, we will be unable to sell our products and services in those locations. If compliance proves to be more expensive or time consuming than we anticipate, our business would be adversely affected. Some countries have not completed their radio frequency allocation process and therefore we do not know the standards with which we would be required to comply. Furthermore, standards and regulatory requirements are subject to change. If we fail to anticipate or comply with these new standards, our business and results of operations will be adversely affected.

Sales to customers outside the U.S. accounted for 18%17%, 11%21% and 9%19% of CalAmp’sour total sales for the fiscal years ended February 28, 2013, 20122016, 2015 and 2011,2014, respectively. Assuming that we continue to sell our products and services to foreign customers, which is our expectation, we will be subject to the political, economic and other conditions affecting countries or jurisdictions other than the U.S., including in Latin America, Africa, the Middle East, Europe and Asia. Any interruption or curtailment of trade between the countries in which we operate and our present trading partners, changes in exchange rates, significant shift in U.S. trade policy toward these countries, or significant downturn in the political, economic or financial condition of these countries, could cause demand for and sales of our products to decrease, or subject us to increased regulation including future import and export restrictions, any of which could adversely affect our business.



Additionally, a substantial portion of our products, components and subassemblies are currently procured from foreign suppliers located primarily in Hong Kong, mainland China, Taiwan and other Pacific Rim countries. Any significant shift in U.S. trade policy toward these countries or a significant downturn in the political, economic or financial condition of these countries could cause disruption of our supply chain or otherwise disrupt operations, which could adversely affect our business.

Our global operations, particularly following our acquisition of LoJack, expose us to risks and challenges associated with conducting business internationally.

We face several risks inherent in conducting business internationally, including compliance with international and U.S. laws and regulations that apply to our international operations. These laws and regulations include data privacy requirements, labor relations laws, tax laws, competition regulations, import and trade restrictions, economic sanctions, export requirements, U.S. laws such as the Foreign Corrupt Practices Act, the UK Bribery Act 2010 and other local laws that prohibit payments to governmental officials or certain payments or remunerations to customers. Given the high level of complexity of these laws there is a risk that some provisions may be breached by us, for example through fraudulent or negligent behavior of individual employees, our failure to comply with certain formal documentation requirements, or otherwise. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers or our employees, requirements to obtain export licenses, cessation of business activities in sanctioned countries, implementation of compliance programs, and prohibitions on the conduct of our business. Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, our business and our operating results.

Disruptions in global credit and financial markets could materially and adversely affect our business and results of operations.

There is significant uncertainty about the stability of global credit and financial markets. Credit market dislocations including as a result of the Eurozone concerns, could cause interest rates and the cost of borrowing to rise or reduce the availability of credit, which could negatively affect customer demand for our products if they responded to such credit market dislocations by suspending, delaying or reducing their capital expenditures. Moreover, since we currently generate more than 10%17% of our revenues outside the United States, fluctuations in foreign currencies can have an impact on our results of operations which are expressed in U.S. dollars. In addition, currency variations can adversely affect profit margins on sales of our products in countries outside of the United States and margins on sales of products that include components obtained from suppliers located outside of the United States.

We may not be able to adequately protect our intellectual property, and our competitors may be able to offer similar products and services that would harm our competitive position.

Other than in our Satellite products business, which currently does not depend upon patented technology, our ability to succeed in wireless data communications markets may depend, in large part, upon our intellectual property for some of our wireless technologies. We currently rely primarily on patents, trademark and trade secret laws, confidentiality procedures and contractual provisions to establish and protect our intellectual property. However, these mechanisms provide us with only limited protection. We currently hold 30 U.S. patents and 6 foreign patents. As part of our confidentiality procedures, we enter into non-disclosure agreements with all employees, including officers, managers and engineers. Despite these precautions, third parties could copy or otherwise obtain and use our technology without authorization, or develop similar technology independently. Furthermore, effective protection of intellectual property rights is unavailable or limited in some foreign countries. The protection of our intellectual property rights may not provide us with any legal remedy should our competitors independently develop similar technology, duplicate our products and services, or design around any intellectual property rights we hold.

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We rely on access to third-party patents and intellectual property, and our future results could be materially and adversely affected if we are unable to secure such access in the future.

Many of our hardware solutions and services are designed to include third-party intellectual property, and in the future we may need to seek or renew licenses relating to such intellectual property. Although we believe that, based on past experience and industry practice, such licenses generally can be obtained on reasonable terms, there is no assurance that the necessary licenses would be available on acceptable terms or at all. Some licenses we obtain may be nonexclusive and, therefore, our competitors may have access to the same technology licensed to us. If we fail to obtain a required license or are unable to design around a patent where we do not hold a license, we may be unable to sell some of our hardware solutions and services, and there can be no assurance that we would be able to design and incorporate alternative technologies, without a material adverse effect on our business, financial condition, and results of operations.

Our competitors have or may obtain patents that could restrict our ability to offer our hardware solutions, software and services, or subject us to additional costs, which could impede our ability to offer our hardware solutions, software and services and otherwise adversely affect us. WeThird parties may claim that we infringe their proprietary rights and may prevent us from time to time, also bemanufacturing and selling some of our products and subject us to litigation over intellectual property rights or other commercial issues.

Several of our competitors have obtained and can be expected to obtain patents that cover hardware solutions, software and services directly or indirectly related to those offered by us. There can be no assurance that we are aware of all existing patents held by our competitors or other third parties containing claims that may pose a risk of our infringement on such claims by our hardware solutions, software and services. In addition, patent applications in the United States may be confidential until a patent is issued and, accordingly, we cannot evaluate the extent to which our hardware solutions, software and services may infringe on future patent rights held by others.

Even with technology that we develop independently, a third party may claim that we are using inventions claimed by their patents and may initiate litigation to stop us from engaging in our normal operations and activities, such as engineering and development and the sale of any of our hardware solutions, software and services. Furthermore, because of rapid technological changes in the M2M industry,marketplace, current extensive patent coverage, and the rapid issuance of new patents, it is possible that certain components of our hardware solutions, software, services, and business methods may unknowingly infringe the patents or other intellectual property rights of third parties. From time to time, we have been notified that we may be infringing such rights.



In the highly competitive and technology-dependent telecommunications field in particular, litigation over intellectual property rights is a significant business risk, and some third parties (referred to as non-practicing, or patent-assertion, entities) are pursuing a litigation strategy with the goal of monetizing otherwise unutilized intellectual property portfolios via licensing arrangements entered into under threat of continued litigation. These lawsuits relate to the validity, enforceability, and infringement of patents or proprietary rights of third parties. We may have to defend ourselves against allegations that we violated patents or proprietary rights of third parties.

Regardless of merit, responding to such litigation can consume significantmay be costly, unpredictable, time-consuming, and expense.often involves complex legal, scientific, and factual questions, and could divert the attention of our management and technical personnel. In certain cases, we may consider the desirability of entering into such licensing agreements or arrangements, although no assurance can be given that these licenses can be obtained on acceptable terms or that litigation will not occur. If we are found to be infringing any intellectual property rights, we maycould lose our right to develop, manufacture, or market products, product launches could be delayed, or we could be required to pay substantial damages.monetary damages or royalties to license proprietary rights from third parties. If there is a temporary or permanent injunction is granted by a court prohibiting us from marketing or selling certain hardware solutions, software and services or a successful claim of infringement against us requires us to pay royalties to a third party, our financial condition and operating results could be materially adversely affected, regardless of whether we can develop non-infringing technology. While

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For example, we are currently engaged in management’s opinion we do not havelitigation with Omega Patents, LLC (Omega). In December 2013, a potential liability for damages or royalties from anypatent infringement lawsuit was filed against the Company by Omega, a non-practicing entity, also known current legal proceedings or claims related toas a patent-assertion entity. Omega alleged that certain of the infringement of patent or other intellectual property rights that would individually orCompany’s vehicle tracking products infringed on certain patents asserted by Omega. On February 24, 2016, a jury in the aggregateU.S. District Court for the Middle District of Florida awarded Omega damages of $2.9 million, for which CalAmp recorded a full accrual for this liability in the fiscal 2016 fourth quarter. Following trial, Omega made a motion seeking an injunction and requesting the court to exercise its discretion to treble damages and assess attorney’s fees. The Company’s responsive motion is pending, and the judge’s ruling has not yet been rendered. CalAmp intends to pursue an appeal at the Court of Appeals for the Federal Circuit. In addition to its appeal, CalAmp is seeking to invalidate a number of Omega’s patents in actions filed with the U.S. Patent and Trademark Office. While it is not feasible to predict with certainty the outcome of this litigation, its ultimate resolution could be material to cash flows and results of operations. Furthermore, if an injunction is issued by the court, we could be prevented from manufacturing and selling a number of our products, which could have a material adverse effect on our business, results of operations, financial condition and operating results,cash flows. Refer to “Note 15 — Legal Proceedings” in the accompanying consolidated financial statements.

Any acquisitions we pursue could disrupt our business and harm our financial condition and results of such potential claims cannotoperations.

As part of our business strategy, we review and intend to continue to review acquisition opportunities that we believe would be predicted with certainty.advantageous or complementary to the development of our business. In any potential matters relatedfiscal 2014, we acquired Wireless Matrix and Radio Satellite Integrators. In fiscal 2016, we acquired Crashboxx, and subsequent to infringementthe end of patentfiscal 2016 we acquired LoJack. We may acquire additional businesses, assets, or other intellectual property rights of others or should several of these matters be resolved against ustechnologies in the same reporting period,future. If we make any acquisitions, we could take any or all of the following actions, any one of which could adversely affect our business, financial condition, results of operations or share price:

●

use a substantial portion of our available cash;

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require a significant devotion of management’s time and resources in the pursuit or consummation of any acquisition;

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incur substantial debt, which may not be available to us on favorable terms and may adversely affect ourliquidity;

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issue equity or equity-based securities that would dilute existing stockholders’ percentage ownership;

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assume contingent liabilities; and

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take substantial charges in connection with acquired assets.

Acquisitions also entail numerous other risks, including, without limitation: difficulties in assimilating acquired operations, products, technologies and personnel; unanticipated costs; diversion of management’s attention from existing operations; risks of entering markets in which we have limited or no prior experience; and potential loss of key employees from either our existing business or the acquired organization. Acquisitions may result in substantial accounting charges for restructuring and other expenses, amortization of purchased technology and intangible assets and stock-based compensation expense, any of which could materially adversely affect our operating results. We may not be able to realize the anticipated benefits of or successfully integrate with our existing business the businesses, products, technologies or personnel that we acquire, and our failure to do so could harm our business and operating results.

Any acquisitions we make and industry consolidation could adversely affect our existing business relationships with our suppliers and customers.

If we make any acquisitions, our existing business relationships with our suppliers and customers could be adversely affected. Moreover, our industry is being affected by the trend toward consolidation and the creation of strategic relationships. If we are unable to successfully adapt to this rapidly changing environment, we could suffer a reduction in the volume of business with our customers and suppliers, or we could lose customers or suppliers entirely, which could materially and adversely affect our financial condition and operating results could be materially adversely affected.

The finite amount of radio frequency spectrum may restrict the growth of the wireless communications industry and demand for our products.

    Radio frequencies are required to provide wireless services. Industry growth has been and may continue to be affected by the availability of licenses required to use frequencies and related costs. The allocation of frequencies is regulated in the United States and other countries throughout the world and limited spectrum space is allocated to the various wireless services. The growth of the wireless communications industry may be affected if adequate frequencies are not allocated or, alternatively, if new technologies are not developed to better utilize the frequencies currently allocated for such use.results.

We depend to some extent upon wireless networks owned and controlled by others, unproven business models, and emerging wireless carrier models to deliver existing services and to grow.

If we do not have continued access to sufficient capacity on reliable networks, we may be unable to deliver services and our sales could decrease. Our ability to grow and achieve profitability partly depends on our ability to buy sufficient capacity on the networks of wireless carriers and on the reliability and security of their systems. Some of our wireless services are delivered using airtime purchased from third parties. We depend on these third parties to provide uninterrupted service free from errors or defects and would not be able to satisfy our customers’ needs if such third parties failed to provide the required capacity or needed level of service. In addition, our expenses would increase and profitability could be materially adversely affected if wireless carriers were to significantly increase the prices of their services. Our existing agreements with the wireless carriers generally have oneone- to three-year terms. Some of these wireless carriers are, or could become, our competitors, and if they compete with us, they may refuse to provide us with airtime on their networks.

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Our failure to predict carrier and end user customer preferences among the many evolving wireless industry standards could hurt our ability to introduce and sell new products.

In our industry, it is critical to our success that we accurately anticipate evolving wireless technology standards and that our products comply with these standards in relevant respects. We are currently focused on engineering and manufacturing products that comply with several different wireless standards. Any failure of our products to comply with any one of these or future applicable standards could prevent or delay their introduction and require costly and time-consuming engineering changes. Additionally, if an insufficient number of wireless operators or subscribers adopt the standards to which we engineer our products, then sales of our new products designed to those standards could be materially harmed.

Our business could be adversely impacted by the interruption, failure or corruption of our proprietary Internet-based systems that are used to configure and communicate with the wireless tracking and monitoring devices that we sell.

Our MRM business dependsand Wireless Networks businesses depend upon several Internet-based systems that are proprietary to our Company. These applications, which are hosted by anat independent data centercenters and are connected via access points to cellular networks, are used by our customers and by us to configure and communicate with wireless devices for purposes of determining location, speed or other conditions of vehicles and other mobile or fixed assets, and to deliver configuration code or executable commands to the devices. If these Internet-based systems failed or were otherwise compromised in some way, it could adversely affect the proper functioning of the wireless tracking and monitoring devices that we sell, and could result in damages being incurred by us as a result of the temporary or permanent inability of our customers to wirelessly communicate with these devices.

Evolving regulation and changes in applicable laws relating to the Internet may increase our expenditures related to compliance efforts or otherwise limit the solutions we can offer, which may harm our business and adversely affect our financial condition.

As Internet commerce continues to evolve, increased regulation by federal, state or foreign agencies becomes more likely. We are particularly sensitive to these risks because the Internet is a critical component of our SaaS and PaaS business model. In addition, taxation of services provided over the Internet or other charges imposed by government agencies or by private organizations for accessing the Internet may be imposed. Any regulation imposing greater fees for Internet use or restricting information exchange over the Internet could result in a decline in the use of the Internet and the viability of Internet-based services, which could harm our business.

Evolving regulation relating to data privacy may increase our expenditures related to compliance efforts or otherwise limit the solutions we can offer, which may harm our business and adversely affect our financial condition.

Our products and solutions enable us to collect, manage and store a wide range of data related to fleet management such as vehicle location and fuel usage, speed and mileage and, in the case of our field service application, includes customer information, job data, schedule, invoice and other information. A valuable component of our solutions is our ability to analyze this data to present the user with actionable business intelligence. We obtain our data from a variety of sources, including our customers and third-party providers. The United States and various state governments have adopted or proposed limitations on the collection, distribution and use of personal information. Several foreign jurisdictions, including the European Union and the United Kingdom, have adopted legislation (including directives or regulations) that increase or change the requirements governing data collection and storage in these jurisdictions. If our privacy or data security measures fail to comply, or are perceived to fail to comply, with current or future laws and regulations, we may be subject to litigation, regulatory investigations, or other liabilities. Moreover, if future laws and regulations limit our customers’ ability to use and share this data, or our ability to store, process and share data with our customers over the Internet, demand for our solutions could decrease, our costs could increase, and our results of operations and financial condition could be harmed.

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We may be subject to breaches of our information technology systems, which could damage our reputation, vendor, and customer relationships, and our customers’ access to our services.

Our business operations require that we use and store sensitive data, including intellectual property, proprietary business information and personally identifiable information, in our secure data centers and on our networks. We face a number of threats to our employeesdata centers and certain customers.networks in the form of unauthorized access, security breaches and other system disruptions. It is critical to our business strategy that our infrastructure remains secure and is perceived by customers and partners to be secure. We require user names and passwords in order to access our information technology systems. We also use encryption and authentication technologies to secure the transmission and storage of data. TheseDespite our security measures, our information technology systems may be compromised as a result of third-party security breaches, employee error, malfeasance, faulty password management,vulnerable to attacks by hackers or other irregularity,disruptive problems. Any such security breach may compromise information used or stored on our networks and may result in persons obtaining unauthorized access tosignificant data losses or theft of our, dataour customers’, or accounts. If a computer securityour business partners’ intellectual property, proprietary business information or personally identifiable information. A cybersecurity breach affects our systems, it could damagenegatively affect our reputation and also expose us toby adversely affecting the market’s perception of the security or reliability of our products or services. In addition, a cyber attack could result in other negative consequences, including remediation costs, disruption of internal operations, increased cybersecurity protection costs, lost revenues or litigation, and possible liability, which could have a material adverse effect on our business, results of operations and financial condition.

Some CalAmp products are subject to mandatory regulatory approvals in the United States and other countries that are subject to change, which could make compliance costly and unpredictable.

Some CalAmp products are subject to certain mandatory regulatory approvals in the United States Canada and other countries in which it operates. In the United States, the Federal Communications Commission (“FCC”) regulates many aspects of communication devices, including radiation of electromagnetic energy, biological safety and rules for devices to be connected to the telephone network. In Canada, similar regulations are administered by Industry Canada.telecommunication networks. Although CalAmp has obtained the required FCC and Industry Canadavarious country approvals for all products it currently sells, there can be no assurance that such approvals can be obtained for future products on a timely basis, or at all. In addition, such regulatory requirements may change or the Company may not in the future be able to obtain all necessary approvals from countries other than Canada or the United States in which it currently sells its products or in which it may sell its products in the future.

We may be subject to product liability, warranty and recall claims whichthat may increase the costs of doing business and adversely affect our business, financial condition and results of operations.

We are subject to a risk of product liability or warranty claims if our products or services actually or allegedly fail to perform as expected or the use of our products or services results, or are alleged to result, in bodily injury and/or property damage. While we maintain what we believe to be reasonable limits of insurance coverage to appropriately respond to such liability exposures, large product liability claims, if made, could exceed our insurance coverage limits and insurance may not continue to be available on commercially acceptable terms, if at all. There can be no assurance that we will not incur significant costs to defend these claims or that we will not experience any product liability losses in the future. In addition, if any of our designed products are, or are alleged to be, defective, we may be required to participate in recalls and exchanges of such products. In the past five years, our warranty expense has fluctuated between approximately 0.3% and 9.5% of sales on an annual basis. Individual quarters were above or below the annual averages. The future cost associated with providing product warranties and/or bearing the cost of repair or replacement of our products could exceed our historical experience and have a material adverse effect on our business, financial condition and results ofoperations.ofoperations.

Reduced consumer or corporate spending dueThe Company’s inability to identify the global economic downturn that beganorigin of conflict minerals in 2008its products could have a material adverse effect on the Company’s business.

Many of the Company’s product lines include tantalum, tungsten, tin, gold and other uncertaintiesmaterials which are considered to be “conflict minerals” under the SEC’s rules. Those rules require public reporting companies to provide disclosure regarding the use of conflict minerals sourced from the Democratic Republic of the Congo and adjoining countries in the macroeconomic environment have affected andmanufacture of products. Those rules, or similar rules that may be adopted in other jurisdictions, could continue to adversely affect our revenuescosts, the availability of minerals used in our products and cash flow.our relationships with customers and suppliers.

Risks Relating to Our Convertible Notes and Indebtedness

We may still incur substantially more debt or take other actions that could diminish our ability to make payments on the convertible notes.

We dependand our subsidiaries may be able to incur substantial additional debt in the future, subject to the restrictions contained in our future debt instruments, some of which may be secured debt. We are not restricted under the terms of the indenture governing the convertible notes from incurring additional debt, securing existing or future debt, recapitalizing our debt or taking a number of other actions that are not limited by the terms of the indenture governing the convertible notes that could have the effect of diminishing our ability to make payments on demandthe convertible notes when due.

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We may not have the ability to raise the funds necessary to settle conversions of the convertible notes in cash, repay the convertible notes at maturity or repurchase the convertible notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the convertible notes.

Holders of the $172.5 million of 1.625% convertible senior notes due 2020 that we issued in May 2015 (the “convertible notes”) will have the right to require us to repurchase all or a portion of their convertible notes upon the occurrence of a fundamental change at a repurchase price equal to 100% of the principal amount of the convertible notes to be repurchased, plus accrued and unpaid interest, if any. The convertible notes will be convertible into cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election, based on an initial conversion rate of 36.2398 shares of common stock per $1,000 principal amount of the convertible notes, which is equivalent to an initial conversion price of $27.594 per share of common stock, subject to customary adjustments. Holders may convert their notes at their option at any time prior to November 15, 2019 upon the occurrence of certain events in the future, as defined in the Indenture. During the period from November 15, 2019 to May 13, 2020, holders may convert all or any portion of their notes regardless of the consumer, original equipment manufacturer, industrial, automotiveforegoing conditions. Upon conversion of the convertible notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the convertible notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of the convertible notes surrendered therefor or pay cash with respect to the convertible notes being converted or at their maturity.

In addition, our ability to repurchase or to pay cash upon conversions or at maturity of the convertible notes may be limited by law, regulatory authority or agreements governing our future indebtedness. Our failure to repurchase the convertible notes at a time when the repurchase is required by the indenture or to pay any cash payable on future conversions of the convertible notes as required by the indenture would constitute a default under the indenture. A fundamental change under the indenture or a default under the indenture could also lead to a default under agreements governing our future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and other marketsrepurchase the convertible notes or make cash payments upon conversions thereof.

The conditional conversion feature of the convertible notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of the convertible notes is triggered, holders of the convertible notes will be entitled to convert the convertible notes at any time during specified periods at their option. If one or more holders elect to convert their convertible notes, unless we serveelect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their convertible notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the convertible notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

The accounting method for convertible debt securities that may be settled in cash, such as the convertible notes, could have a material adverse effect on our reported financial results.

Accounting Standards Codification Subtopic 470-20, Debt with Conversion and Other Options (“ASC 470-20”), requires an entity to separately account for the end market applicationsliability and equity components of convertible debt instruments (such as the convertible notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s non-convertible debt interest rate. Accordingly, the equity component of the convertible notes is required to be included in the additional paid-in capital section of stockholders’ equity on our products. Our revenuesconsolidated balance sheet, and the value of the equity component is treated as original issue discount for purposes of accounting for the debt component of the convertible notes. As a result, we are based on certain levelsrequired to recognize a greater amount of consumernon-cash interest expense in our consolidated income statements in the current and corporate spending. If the significant reductions in consumer or corporate spendingfuture periods presented as a result of uncertain conditionsthe amortization of the discounted carrying value of the convertible notes to their principal amount over the term of the convertible notes. We will report lower net income (or greater net losses) in our consolidated financial results because ASC 470-20 will require interest to include both the current period’s amortization of the original issue discount and the instrument’s non-convertible interest rate. This could adversely affect our reported or future consolidated financial results, the trading price of our common stock and the trading price of the convertible notes. 

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In addition, under certain circumstances, in calculating earnings per share, convertible debt instruments (such as the convertible notes) that may be settled entirely or partly in cash are currently accounted for utilizing a method in which the shares of common stock issuable upon conversion of the convertible notes, if any, are not included in the macroeconomic environmentcalculation of diluted earnings per share except to the extent that the conversion value of the convertible notes exceeds their principal amount. Under this method, diluted earnings per share is calculated as if the number of shares of common stock that would be necessary to settle such excess, if we elected to settle such excess in shares, were issued. We cannot be sure that the accounting standards in the future will continue to permit the use of this method. If we are unable to use this method in accounting for the shares issuable upon conversion of the convertible notes, if any, then our revenues, profitability and cash flowdiluted consolidated earnings per share could be adversely affected.

Rises in interest rates couldThe convertible note hedge and warrant transactions may adversely affect the value of our financial condition.common stock.

In connection with the sale of the convertible notes, we entered into convertible note hedge transactions with certain financial institutions that we refer to as the option counterparties. The convertible note hedge transactions are expected to offset the potential dilution to our common stock upon any conversion of convertible notes and/or offset any cash payments we are required to make in excess of the principal amount upon conversion of any convertible notes. We also entered into warrant transactions with the option counterparties pursuant to which we sold warrants for the purchase of our common stock. The warrant transactions could separately have a dilutive effect if and to the extent that the market price per share of our common stock exceeds the applicable strike price of the warrants.

We have been advised that the option counterparties or their respective affiliates may modify their initial hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the convertible notes (and are likely to do so during any observation period related to a conversion of convertible notes or following any repurchase of convertible notes by us in connection with any fundamental change repurchase date or otherwise). This activity could suppress or inflate the market price of our common stock.

The effect, if any, of these activities, including the direction or magnitude, on the market price of our common stock will depend on a variety of factors, including market conditions, and cannot be ascertained at this time. Any of these activities could, however, adversely affect the market price of our common stock and the trading price of the convertible notes.

    AnWe are subject to counterparty risk with respect to the convertible note hedge transactions.

The option counterparties are financial institutions or affiliates of financial institutions, and we will be subject to the risk that one or more option counterparties may default under the convertible note hedge transactions. Our exposure to the credit risk of the option counterparties will not be secured by any collateral. If any of the option counterparties becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at the time under those transactions. Our exposure will depend on many factors but, generally, the increase in prevailing interest rates could have an immediate effect onour exposure will be correlated to the interest rates charged onincrease in the market price of our variable rate bank debt with Square 1 Bank, which risecommon stock and fall upon changes in interest rates on a periodic basis. Any increased interest expense associated with increases in interest rates affectsthe volatility of the market price of our profitability and cash flow.common stock. We can provide no assurances as to the financial stability or viability of any of the option counterparties.



Risks Relating to Our Common Stock and the Securities Market

Future issuances of shares of our common stock could dilute the ownership interests of our stockholders.

Any issuance of equity securities could dilute the interests of our stockholders and could substantially decrease the trading price of our common stock. We may issue equity securities in the future for a number of reasons, including to finance our operations and business strategy (including in connection with acquisitions, strategic collaborations or other transactions), to adjust our ratio of debt to equity, to satisfy our obligations upon the exercise of outstanding options or for other reasons. In May 2015, we issued the convertible notes and, to the extent we issue common stock upon conversion of the convertible notes, that conversion would dilute the ownership interests of our stockholders.

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Anti-takeover defenses in our charter and under Delaware law could prevent us from being acquired or limit the price that investors might be willing to pay for our common stock in an acquisition.

Section 203 of the Delaware General Corporation Law prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years from the time the person became an interested stockholder, unless specific conditions are met. In addition, we have in place various protections which would make it difficult for a company or investor to buy the Company without the approval of our Board of Directors, including authorized but undesignated preferred stock and provisions requiring advance notice of board nominations and other actions to be taken at stockholder meetings. All of the foregoing could hinder, delay or prevent a change in control and could limit the price that investors might be willing to pay in the future for shares of our common stock.

The trading price of shares of our common stock may be affected by many factors and the price of shares of our common stock could decline.

As a publicly traded company, the trading price of our common stock has fluctuated significantly in the past. The future trading price of our common stock may be volatile and could be subject to wide price fluctuations in response to such factors, including:

  • actual or anticipated fluctuations in revenues or operating results;
  • failure to meet securities analysts’ or investors’ expectations of performance;
  • changes in key management personnel;
  • announcements of technological innovations or new products by CalAmp or its competitors;
  • developments in or disputes regarding patents and proprietary rights;
  • proposed and completed acquisitions by us or our competitors;
  • the mix of products and services sold;
  • the timing, placement and fulfillment of significant orders;
  • product and service pricing and discounts;
  • acts of war or terrorism; and
  • general economic conditions.
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actual or anticipated fluctuations in revenues or operating results;

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failure to meet securities analysts’ or investors’ expectations of performance;

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changes in key management personnel;

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announcements of technological innovations or new products by us or our competitors;

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developments in or disputes regarding patents and proprietary rights;

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proposed and completed acquisitions by us or our competitors;

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the mix of products and services sold;

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the timing, placement and fulfillment of significant orders;

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product and service pricing and discounts;

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acts of war or terrorism; and

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general economic conditions.

Our stock price has been highly volatile in the past and could be highly volatile in the future.

The market price of our stock has beencan be highly volatile due to the risks and uncertainties described in this Annual Report, as well as other factors, including:

  • including substantial volatility in quarterly revenues and earnings due to our current dependence on a small number of major customers;
  • comments by securities analysts;analysts and
  • our failure to meet market expectations.

Over the two-year period ended February 28, 2013,2016, the price of CalAmp common stock as reported on The Nasdaq StockNASDAQ Global Select Market ranged from a high of $11.50$34.85 to a low of $2.60.$14.01. The stock market has from time to time experienced extreme price and volume fluctuations that were unrelated to the operating performance of particular companies. In the past, companies that have experienced volatility have sometimes subsequently become the subject of securities class action litigation. If litigation were instituted on this basis, it could result in substantial costs and a diversion of management’s attention and resources.

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Lack of expected dividends may make our stock less attractive as an investment.

We intend to retain all future earnings for use in the development of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Generally,In certain cases, stocks that pay regular dividends command higher market trading prices, and so our stock price may be lower as a result of our dividend policy.

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Risk FactorsRisks Relating to the Wireless MatrixLoJack Acquisition

We may be unable to successfully integrate Wireless Matrix’sLoJack’s business and realize the anticipated benefits of the acquisition.

We will be required to devote significant management attention and resources to integrating the business practices and operations of Wireless MatrixLoJack into our company. Prior to the acquisition, LoJack operated independently, with its own business, corporate culture, locations, employees, and systems. Potential difficulties that we may encounter in the integration process include the following:

  • the inability to combine the businesses of Wireless Matrix and
    ●the inability to combine the businesses of LoJack with CalAmp’s pre-existing operations in a manner that permits us to achieve the benefits we anticipate from the acquisition, including cost savings and other synergies;
    ●distracting management from day-to-day operations;
    ●potential incompatibility of corporate cultures;
    ●lost sales if customers of either LoJack or CalAmp decide not to do business with us;
    ●the failure to retain key employees of either LoJack or us;
    ●potential unknown liabilities and unforeseen increased expenses, delays or regulatory issues associated with the acquisition; and
    ●difficulties in applying our operating and administrative control policies and procedures to LoJack.

  • lost sales if customers of either Wireless Matrix or us decide not to do business with us after the acquisition;
  • the failure to retain key employees of either Wireless Matrix or us;
  • potential unknown liabilities and unforeseen increased expenses, delays or regulatory issues associated with the acquisition; and
  • difficulties in applying our operating and administrative control policies and procedures to Wireless Matrix.

For all these reasons, it is possible that the integration process following the Wireless MatrixLoJack acquisition could divert management’s attention, disrupt our ongoing business, or otherwise prove unsuccessful. Any such issues could adversely affect our ability to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits of the acquisition, or could otherwise adversely affect our business and financial results.

We expect to continue to incur transaction and integration expenses related to the Wireless MatrixLoJack acquisition.

We expect to continue to incur certain expenses in connection with completing the Wireless Matrix acquisition and integrating Wireless Matrix’sLoJack’s operations, policies and procedures with ours, some of which may be significant. While we have assumed that a certain amount of transaction and integration expenses will be incurred, there are a number of factors beyond our control that could affect the total amount or the timing of these expenses.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

17


ITEM 2. PROPERTIES

Our principal facilities, at the end of fiscal 2013, all leased, wereare as follows:

Square
LocationFootageUse 
Irvine, California13,000Corporate headquarters and Wireless DataCom offices
Oxnard, California98,000Corporate office, Satellite offices and
principal manufacturing plantfacility
Carlsbad, California18,00026,000Wireless DataCom offices
Irvine,Torrance, California7,0005,000Wireless DataCom offices
Chaska, MinnesotaHerndon, Virginia5,00010,000Wireless DataCom offices
Waseca, Minnesota10,0008,000Wireless DataCom offices
Montreal, Quebec, CanadaEden Prairie, Minnesota8,0007,000Wireless DataCom offices
Auckland, New Zealand4,000Wireless DataCom offices



ITEM 3. LEGAL PROCEEDINGS

    We areIn December 2013, a patent infringement lawsuit was filed against the Company by Omega Patents, LLC, (Omega), a non-practicing entity, also known as a patent-assertion entity. Omega alleged that certain of the Company’s vehicle tracking products infringed on certain patents asserted by Omega. On February 24, 2016, a jury in the U.S. District Court for the Middle District of Florida awarded Omega damages of $2.9 million, for which CalAmp recorded a full accrual for this liability in the fiscal 2016 fourth quarter. Following trial, Omega made a motion seeking an injunction and requesting the court to exercise its discretion to treble damages and assess attorney’s fees. The Company’s responsive motion is pending, and the judge’s ruling has not currently involvedyet been rendered. CalAmp intends to pursue an appeal at the Court of Appeals for the Federal Circuit. In addition to its appeal, CalAmp is seeking to invalidate a number of Omega’s patents in actions filed with the U.S. Patent and Trademark Office. Notwithstanding the adverse jury verdict, the Company continues to believe that its products do not infringe Omega’s patents and that it will prevail on appeal. While it is not feasible to predict with certainty the outcome of this litigation, its ultimate resolution could be material to cash flows and results of operations. Furthermore, if an injunction is issued by the court, we could be prevented from manufacturing and selling a number of our products, which could have a material adverse effect on our business, results of operations, financial condition and cash flows. Refer to “Note 15 — Legal Proceedings” in the accompanying consolidated financial statements.

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

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

18


PART II

ITEM 5.  

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company's Common Stock trades on the NASDAQ Global Select Market under the ticker symbol CAMP. The following table sets forth, for the last two years, the quarterly high and low sale prices for the Company's Common Stock as reported by NASDAQ:

     LOW     HIGHLOWHIGH
Fiscal Year Ended February 28, 2013
Fiscal Year Ended February 28, 2016
1st Quarter $4.14$6.79$     16.04     $     21.82
2nd Quarter$5.80 $8.55$14.01$20.27
3rd Quarter$6.77$9.72$15.12$20.15
4th Quarter$7.65$11.50$15.56$21.35
Fiscal Year Ended February 28, 2012
Fiscal Year Ended February 28, 2015
1st Quarter$2.90$3.38$14.74$34.85
2nd Quarter$2.70$3.98$16.57$22.36
3rd Quarter$2.60$4.49$15.51$20.84
4th Quarter$       4.00$       5.14$15.32$20.00

At March 31, 2013,2016, the Company had approximately 1,6501,400 stockholders of record. The number of stockholders of record does not include the number of persons having beneficial ownership held in "street name" which are estimated to approximate 6,000.33,000. The Company has never paid a cash dividend and has no current plans to pay cash dividends on its Common Stock. The Company's bank credit agreement prohibits payment of dividends without the prior written consent of the bank.

19



ITEM 6. SELECTED FINANCIAL DATA

Year Ended February 28,Year Ended February 28,
     2013     2012     2011     2010     200920162015  201420132012
(In thousands except per share amounts)(In thousands except per share amounts)
OPERATING DATA
Revenues$180,579$138,728$114,333$112,113$98,370$    280,719   $    250,606   $    235,903    $    180,579   $    138,728
Cost of revenues123,68696,70984,77589,72360,244177,760163,202155,972 123,68696,709
Gross profit56,89342,01929,55822,39038,126102,95987,40479,93156,89342,019
Operating expenses:
Research and development14,29111,32811,125 10,943 12,89919,80319,85421,05214,29111,328
Selling12,72511,06010,5039,542 8,95923,38020,44219,83712,72511,060
General and administrative12,15410,984 8,85810,52312,08725,06515,57814,41612,15410,984
Intangible asset amortization1,7431,277 1,1321,3674,4296,6266,5906,2831,7431,277
Impairment loss-  ---44,736
Total operating expenses  40,913 34,649 31,618 32,37583,11074,87462,46461,58840,91334,649
Operating income (loss)15,9807,370(2,060)(9,985) (44,984)
Operating income28,08524,94018,34315,9807,370
Non-operating expense, net(532)(2,091)(1,395)(2,240)(911)(5,744)(140)(432)(532)(2,091)
Income (loss) before income taxes15,4485,279(3,455)(12,225)(45,895)
Income before income taxes and equity in net loss of affiliate22,34124,80017,91115,4485,279
Income tax benefit (provision)29,178(61)1721,374(3,770)(4,572)(8,292)(6,108)29,178(61)
Net income (loss)$44,626$5,218$(3,283)$(10,851)$(49,665)
Earnings (loss) per share:
Income before equity in net loss of affiliate17,76916,50811,80344,6265,218
Equity in net loss of affiliate(829)----
Net income$16,940$16,508$11,803$44,626$5,218
Earnings per share:
Basic$1.54$0.19$(0.12)$(0.43)$(2.01)$0.46$0.46$0.34$1.54$0.19
Diluted$1.49$0.18$(0.12)$(0.43)$(2.01)$0.46$0.45$0.33$1.49$0.18
February 28,February 28,
2013201220112010200920162015 201420132012
(In thousands except ratio)(In thousands except ratio)
BALANCE SHEET DATA
Current assets$106,769$39,789$38,103$37,490$44,175$298,767$116,054$84,622$100,369$34,364
Current liabilities$28,949$23,601$32,869$33,095$45,458$49,565$47,005$42,118$28,949$23,601
Working capital (deficit)$77,820$16,188$5,234$4,395$(1,283)
Working capital$249,202$69,049$42,504$71,420$10,763
Current ratio3.71.71.21.11.06.02.52.03.51.5
Total assets$150,771$51,481$55,485$56,953$69,647$384,363$202,617$179,265$150,771$51,481
Long-term debt$2,434$1,900$4,460$4,170$-$139,800$-$702$2,434$1,900
Stockholders' equity$       117,549$       24,977$       17,602$       19,199$       23,199$189,447$151,385$133,147$117,549$24,977

Effective at the end of fiscal 2015, the Company changed its fiscal year-end from a 52-53 week fiscal year ending on the Saturday that falls the closest to February 28 to a fiscal year ending on the last day of February. In the Selected Financial Data tables above and elsewhere throughout this Form 10-K, the fiscal year end for all years is shown as February 28 for clarity of presentation. The actual period end dates are February 29, 2016, February 28, 2015, March 1, 2014, March 2, 2013 and February 25, 2012.

20



Factors affecting the year-to-year comparability of the Selected Financial Data include business acquisitions asset impairment charges, financing transactions and other significant events, as follows:

  • In fiscal 2009, the Company recorded a Satellite segment impairment charge of $2.3 million, a Wireless DataCom segment impairment charge of $41.3 million and an investment impairment charge of $1.1 million.
    ●In fiscal 2016, the Company issued $172.5 million aggregate principal amount of 1.625% convertible senior unsecured notes through a private placement. See Note 8 to the accompanying consolidated financial statements for additional information on the convertible notes.
    ●The Company incurred transaction expenses of approximately $2.0 million in fiscal 2016 related to the acquisition of LoJack which was consummated subsequent to the end of fiscal 2016.
    ●In fiscal 2016, the Company invested £1,400,000 or approximately $2.2 million for a minority ownership interest in Smart Driver Club Limited, a technology and insurance startup company located in the United Kingdom. This investment is accounted for under the equity method and the Company’s equity in the net loss of this affiliate amounted to $829,000 in fiscal 2016. See Note 7 to the accompanying consolidated financial statements for additional information on this investment.
    ●In fiscal 2016, the Company reduced its deferred tax assets valuation allowance by $2.5 million and recognized federal research and development tax credits of $0.6 million which lowered its effective tax rate to 20.5% for the year.
    ●In fiscal 2014, the Company acquired Wireless Matrix USA, Inc. and Radio Satellite Integrators, Inc. See Note 2 to the accompanying consolidated financial statements for additional information on these two acquisitions.
    ●In fiscal 2013, the Company recognized an income tax benefit of $29.2 million, primarily as a result of eliminating substantially all of the valuation allowance for deferred income tax assets at the end of fiscal 2013. Excluding the effects of this $29.2 million income tax benefit, fiscal 2013 net income was $15.5 million and earnings per share was $0.54 basic and $0.52 diluted.

  • In fiscal 2009, the Company received $9 million in a legal settlement with Rogers Corporation, a supplier of laminate materials that are part of the Company's DBS products. This was recorded as a reduction of Satellite cost of revenues.
    ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

  • In fiscal 2013, the Company recognized an income tax benefit of $29.2 million, primarily as a result of eliminating substantially all of the valuation allowance for deferred income tax assets at the end of fiscal 2013. Excluding the effects of this $29.2 million income tax benefit, fiscal 2013 net income was $15.5 million and earnings per share was $0.54 basic and $0.52 diluted.
  • In the fourth quarter of fiscal 2013, the Company completed a public sale of common stock that raised net proceeds of approximately $44.8 million to fund the Wireless Matrix acquisition. On March 4, 2013, which was just after the end of fiscal 2013 the Company took out a $5 million bank term loan and consummated the acquisition of Wireless Matrix for a cash payment of $52.9 million. Giving pro forma effect to the $5 million bank term loan and the acquisition of Wireless Matrix as if both of these events had occurred on the last day of fiscal 2013, Selected Balance Sheet Data at February 28, 2013 would have been as follows (in $000s, except ratio):
                 Current assets     $69,623
Current liabilities$33,280
Working capital$36,343
 Current ratio2.1
 
Total assets$158,302
Long-term debt$5,634
Stockholders’ equity$       117,549

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

Forward looking statements in this Annual Report on Form 10-K which include, without limitation, statements relating to the Company's plans, strategies, objectives, expectations, intentions, projections and other information regarding future performance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "may"“may”, "will"“will”, "could"“could”, "plans"“plans”, "intends"“intends”, "seeks"“seeks”, "believes"“believes”, "anticipates"“anticipates”, "expects"“expects”, "estimates"“estimates”, "judgment"“judgment”, "goal"“goal”, and variations of these words and similar expressions, are intended to identify forward-looking statements. These forward-looking statements reflect the Company's current views with respect to future events and financial performance and are subject to certain risks and uncertainties that are difficult to predict, including, without limitation, product demand, competitive pressures and pricing declines in the Company's wireless and satellite 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, our ability to integrate the business of Wireless Matrix and to achieve the operating results management anticipates,potential needs for additional capital and other risks and uncertainties that are set forth under the caption in Part I, Item 1A of this Annual Report on Form 10-K.10-K (Risk Factors). Such risks and uncertainties could cause actual results to differ materially and adversely from historical or anticipated results. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be attained. The Company undertakes no obligation to updaterevise or revisepublicly release the results of any revision to these forward-looking statements, whetherexcept as a result of new information, future events or otherwise.

Basis of Presentation

    The Company uses a 52-53 week fiscal year endingrequired by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on the Saturday closest to February 28, which for fiscal years 2013, 2012 and 2011 fell on March 2, 2013, February 25, 2012, and February 26, 2011, respectively. In these consolidated financial statements, the fiscal year end for all years is shown as February 28 for clarity of presentation. Fiscal 2013 consisted of 53 weeks, while fiscal years 2012 and 2011 each consisted of 52 weeks.such forward-looking statements.

16


Overview

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

21


WIRELESS DATACOM

    The Company’sOur Wireless DataCom segment offers solutions to address the markets for Machine-to-Machine, or M2M, communications, Mobile Resource Management or MRM,(MRM) applications, the broader Machine-to-Machine (M2M) communications space and other emerging applicationsmarkets that require connectivity anytime and everywhere connectivity. The Company’sanywhere. Our MRM and M2M and MRM solutions enable customers to optimize their operations by collecting, monitoring and efficiently reporting business-critical data and desired intelligence from high-value remote and mobile assets. The Company’sOur extensive portfolio of intelligent communications devices, scalable cloud servicesservice platforms, and targeted software applications streamline otherwise complex M2M or MRM deployments for itsour customers. The Company isWe are focused on delivering products, software services and solutions globally infor our coreenergy, government, transportation and automotive vertical markets in Energy, Government and Transportation.markets. In addition, the Company anticipates significantwe anticipate future opportunities for adoption of itsour MRM products and M2M and MRM solutions in Construction, Miningheavy equipment and Usage-Based Automobile Insurance vertical markets,various aftermarket telematics applications including insurance telematics, as well as other emerging applications in additional markets.

SATELLITE

The Company's satellite products are sold primarily to Echostar,EchoStar, an affiliate of Dish Network, for incorporation into complete subscription satellite television systems.

Subsequent to the end of fiscal 2016, EchoStar notified us that, as a result of a consolidation of its supplier base in specific areas of its business to better align with its future requirements and its reduced demand for the products that we currently supply, it has determined that it will discontinue purchasing products from CalAmp at the end of the current product demand forecast. EchoStar’s current product demand forecast extends through August 2016. As a result of EchoStar’s decision, we expect sales to this customer will cease after the second quarter of fiscal 2017. We are currently evaluating our Satellite business, but in light of the fact that EchoStar accounts for essentially all of the revenue of our Satellite segment, we expect that this portion of our operations will be discontinued during fiscal 2017. We do not believe that the loss of EchoStar as a customer will have a material adverse effect on our business.

Critical Accounting Policies

The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting periods. Areas where significant judgments are made include, but are not limited to, the allowance for doubtful accounts, inventory valuation, product warranties, the deferred tax assetassets valuation allowance, and the valuation of long-lived assets. Actual results could differ materially and adversely from these estimates.

Allowance for Doubtful Accounts

The Company establishes an allowance for estimated bad debts based upon a review and evaluation of specific customer accounts identified as known and expected collection problems, based on historical experience, or due to insolvency or other collection issues. As further described in Note 1 to the accompanying consolidated financial statements, the Company's customer base is concentrated, with one customer accounting for approximately 22% of the Company's fiscal 2013 consolidated revenues. Changes in either a key customer's financial position, or the economy as a whole, could cause actual write-offs to be materially different from the recorded allowance amount.

Inventories

The Company evaluates the carrying value of inventory on a quarterly basis to determine if the carrying value is recoverable at estimated selling prices. To the extent that estimated selling prices do not exceed the associated carrying values, inventory carrying amounts are written down. In addition, the Company generally treats inventory on hand or committed with suppliers, that is not expected to be sold within the next 12 months, as excess and thus appropriate write-downs of the inventory carrying amounts are established through a charge to cost of revenues. Estimated usage in the next 12 months is based on firm demand represented by orders in backlog at the end of the quarter and management's estimate of sales beyond existing backlog, giving consideration to customers' forecasted demand, ordering patterns and product life cycles. Significant reductions in product pricing or changes in technology and/or demand may necessitate additional write-downs of inventory carrying value in the future.

17


Warranty

The Company initially provides for the estimated cost of product warranties at the time revenue is recognized. While it engages in extensive product quality programs and processes, the Company's warranty obligation is affected by product failure rates and material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from management's estimates, revisions to the estimated warranty liability would be required.

22


Deferred Income Tax and Uncertain Tax Positions

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and for income tax purposes. A deferred income tax asset is recognized if realization of such asset is more likely than not, based upon the weight of available evidence that includes historical operating performance and the Company's forecast of future operating performance. The Company evaluates the realizability of its deferred income tax assets and a valuation allowance is provided, as necessary. During this evaluation, the Company reviews its forecasts of income in conjunction with the positive and negative evidence surrounding the realizability of its deferred income tax assets to determine if a valuation allowance is needed. Pursuant to the evaluation conducted for fiscal 2013, the

The Company eliminated substantially all of the valuation allowance for deferred income tax assets at the end of fiscal 2013, resulting in an income tax benefit of $29.2 million for the year.

    In 2007, the Company adopted an accounting pronouncement related tofollows Financial Accounting Standards Board Accounting Standards Codification ("ASC")(ASC) Topic 740, “Income Taxes” (formerly FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”)) which established a framework for determining the appropriate level of tax reserves to maintain for “uncertain tax positions”. ASC Topic 740 uses a two-step approach in which a tax benefit is recognized if a position is more likely than not to be sustained. The amount of the benefit is then measured as the highest tax benefit that is greater than 50% likely to be realized upon settlement. At February 28, 2013,2016, the Company had unrecognized tax benefits for uncertain tax positions of $1.1$1.0 million.

Impairment Assessments of Goodwill, Purchased Intangible Assets and Other Long-Lived Assets

At February 28, 2013,2016, the Company had $5.7$16.5 million in netgoodwill, $17.0 million in other intangible assets and $2.8$11.2 million in net property and equipment and improvements on its consolidated balance sheet. All goodwill and other intangible assets are attributable to the Wireless DataCom segment. The Company believes the valuation of its long-lived assets is a "critical“critical accounting estimate"estimate” because if circumstances arose that led to a decrease in the valuation of such assets, it could have a material and adverse impact on the Company's results of operations.

The Company makes judgments about the recoverability of goodwill, other intangible assets and other long-lived assets whenever events or changes in circumstances indicate that an impairment in the remaining value of the assets recorded on the balance sheet may exist. The Company performs its goodwill impairment test in the fourth quarter of each year. The Company did not recognize any impairment charges related to goodwill during fiscal years 2016, 2015 and 2014. If an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value, goodwill would be evaluated for impairment between annual tests.

In order to estimate the fair value of long-lived assets, the Company typically makes various assumptions about the future prospects for the business that the asset relates to, considers market factors specific to that business and estimates future cash flows to be generated by that business. These assumptions and estimates are necessarily subjective and based on management's best estimates based on the information available at the time such estimates are made. Based on these assumptions and estimates, the Company determines whether it needs to record an impairment charge to reduce the value of the asset stated on the balance sheet to reflect its estimated fair value determined by a discounted cash flow analysis. Assumptions and estimates about future values and remaining useful lives are complex and often subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in the Company's business strategy and its internal forecasts. Although management believes the assumptions and estimates that have been made in the past have been reasonable and appropriate, different assumptions and estimates could materially impact the Company's reported financial results. More conservative assumptions of the anticipated future benefits from these businesses could result in impairment charges in the statement of operations, and lower asset values on the balance sheet. Conversely, less conservative assumptions could result in smaller or no impairment charges.

Stock-Based Compensation Expense

The Company measures stock-based compensation expense at the grant date, based on the fair value of the award, and recognizes the expense over the employee's requisite service (vesting) period using the straight-line method. The measurement of stock-based compensation expense is based on several criteria including, but not limited to, the valuation model used and associated input factors, such as expected term of the award, stock price volatility, risk free interest rate and forfeiture rate. Certain of these inputs are subjective to some degree and are determined based in part on management's judgment. The Company recognizes the compensation expense on a straight-line basis for its graded-vesting awards. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. However, the cumulative compensation expense recognized at any point in time must at least equal the portion of the grant-date fair value of the award that is vested at that date. As used in this context, the term "forfeitures" is distinct from "cancellations"“cancellations” or "expirations"“expirations”, and refers only to the unvested portion of the surrendered equity awards.

1823


Revenue Recognition

The Company recognizes revenue from product sales when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection of the sales price is reasonably assured. In cases where terms of sale include subjective customer acceptance criteria, revenue is deferred until the acceptance criteria are met. Critical judgments made by management related to revenue recognition include the determination of whether or not customer acceptance criteria are perfunctory or inconsequential. The determination of whether or not the customer acceptance terms are perfunctory or inconsequential impacts the amount and timing of revenue recognized. Critical judgments also include estimates of warranty reserves, which are established based on historical experience and knowledge of the product.

The Company provides Software as a Service (SaaS) subscriptions for its fleet management and vehicle finance applications in which customers are provided with the ability to wirelessly communicate with monitoring devices installed in vehicles via a software application hosted by the Company. The Company defers revenues fromthe recognition of revenue for the monitoring device products that are sold with data communication servicesapplication subscriptions because the application services are essential to the functionality of the products, and accordingly, the associated product costs are recorded as deferred costs. Thesecosts in the balance sheet. The deferred product revenue and deferred product cost amounts are recognizedamortized to application subscriptions revenue and cost of revenue on a straight-line basis over the minimum contractual termservice periods of one year on a straight-line basis.to three years. Revenues from renewals of thedata communication services after the initial one year term are recognized as application subscriptions revenue when the services are performed. In certain instances whereprovided. When customers prepay theapplication subscription renewals, such amounts are recorded as deferred revenues and are recognized over future periods in accordance with the renewal term.

    The Company also undertakes projects that include the design, development and manufacture of communication systems used in the public safety and transportation sectors that are specially customized to customers' specifications or that involve fixed site construction. Sales under such contracts are recorded under the percentage-of-completion method. Estimated revenues and costs are recorded as work is performed based on the percentage that incurred costs bear to estimated total costs utilizing the most recent estimates of costs. If the current contract estimate indicates a loss, provision is made for the total anticipated loss in the current period. Critical estimates made by management related to revenue recognition under the percentage-of-completion method include the estimation of costs at completion.

Results of Operations, Fiscal Years 20112014 Through 20132016

The following table sets forth, for the periods indicated, the percentage of revenues represented by items included in the Company's consolidated statements of operations:income:

Year Ended February 28,Year Ended February 28,
     2013     2012     20112016     2015     2014
Revenues      100.0%      100.0%      100.0%100.0%100.0%100.0%
Cost of revenues68.569.774.163.365.166.1
Gross profit31.530.325.936.734.933.9
Operating expenses:
Research and development7.98.29.7 7.17.98.9
Selling7.08.0 9.28.38.28.4
General and administrative 6.77.97.78.96.26.1
Intangible asset amortization1.00.9 1.02.42.62.7
Operating income (loss)8.9  5.3(1.7)
Other expense, net(0.3)(1.5)(1.3)
Income (loss) before income taxes8.63.8(3.0)
Income tax benefit16.2-0.2
Net income (loss)24.8%3.8%(2.8%)
Operating income10.010.07.8
Non-operating expense, net(2.0)(0.1)(0.2)
Income before income taxes and equity in net loss of affiliate8.09.97.6
Income tax provision(1.6)(3.3)(2.6)
Income before equity in net loss of affiliate6.46.65.0
Equity in net loss of affiliate(0.3)--
Net income6.1%6.6%5.0%

24



The Company's revenue, gross profit and operating income (loss) by business segment for the last three years are as follows:

REVENUE BY SEGMENT

Year ended February 28,REVENUE BY SEGMENT
201320122011
% of% of% of
     $000s     Total     $000s     Total     $000s     Total
Segment
Wireless DataCom$139,50377.3%$99,12171.4%$78,43468.6%
Satellite41,07622.7%39,60728.6%35,89931.4%
Total$       180,579       100.0%$       138,728       100.0%$       114,333       100.0%
GROSS PROFIT BY SEGMENT
Year ended February 28,Year ended February 28,
2013201220112016    2015    2014
% of% of% of    % of    % of    % of
$000sTotal$000sTotal$000sTotal$000sTotal$000sTotal$000sTotal
Segment
Wireless DataCom$50,00587.9%$38,63291.9%$27,92294.5%$241,38786.0%$213,11985.0%$187,01279.3%
Satellite6,88812.1%3,3878.1%1,6365.5%39,33214.0%37,48715.0%48,89120.7%
Total$56,893100.0%$42,019100.0%$29,558100.0%$280,719100.0%$250,606100.0%$235,903100.0%
OPERATING INCOME (LOSS) BY SEGMENT
GROSS PROFIT BY SEGMENT
Year ended February 28,
201620152014
% of% of% of
$000sTotal$000sTotal$000sTotal
Segment
Wireless DataCom$91,97689.3%$77,89989.1%$70,11487.7%
Satellite10,98310.7%9,50510.9%9,81712.3%
Total$102,959100.0%$87,404100.0%$79,931100.0%
OPERATING INCOME BY SEGMENT
Year ended February 28,Year ended February 28,
201320122011201620152014
% of% of% of % of% of% of
TotalTotalTotalTotalTotalTotal
$000sRevenue$000sRevenue$000sRevenue$000sRevenue$000sRevenue$000sRevenue
Segment
Wireless DataCom$16,8449.3%$11,5648.3% $4,218 3.7%$28,14810.0% $23,8339.6%$16,324 6.9%
Satellite 3,111 1.7% (292) (0.2%)(2,903)(2.5%)6,4172.3%5,0172.0%5,6422.4%
Corporate expenses(3,975)(2.2%)(3,902)(2.8%)(3,375)(3.0%)(6,480)        (2.3%)(3,910)        (1.6%)(3,623)        (1.5%)
Total$15,9808.8%$7,3705.3%$(2,060)(1.8%)$        28,08510.0%$        24,94010.0%$        18,3437.8%

Fiscal Year 20132016 compared to Fiscal Year 20122015

Revenue

Wireless DataCom revenue increased by $40.4$28.3 million, or 41%13%, to $139.5$241.4 million in fiscal 20132016 compared to the fiscal 2012.$213.1 million last year. These improvementsincreases were due primarily to increased demand forsales of MRM products into the Company’s MRM products.fleet management and non-vehicle asset tracking markets, as well as the revenue generated from a major original equipment manufacturer in the heavy equipment industry.

Satellite revenue increased by $1.5$1.8 million, or 4%5%, to $41.1$39.3 million in fiscal 2013 from $39.62016 compared to $37.5 million last year due primarily due to the introduction of a new productsproduct that we began shipping in the latter partsecond half of fiscal 2012.2015.

25



Gross Profit and Gross Margins

Wireless DataCom gross profit increased by $11.4$14.1 million to $50.0$92.0 million in fiscal 2013 compared to $38.6 million last year due mainly to increased MRM hardware revenue, and gross margin decreased to 35.8% in fiscal 20132016 from 39.0% in fiscal 2012 due primarily to the fact that fiscal 2012 included revenue of $3.0 million from a patent sale for which there was no associated cost of revenue. Excluding the effects of the fiscal 2012 patent sale, the Wireless DataCom gross margin in fiscal 2013 was down 1.3 points year-over-year due primarily to a higher percentage of MRM product sales.

    The Satellite segment had gross profit of $6.9 million in fiscal 2013, compared with gross profit of $3.4 million last year. Satellite gross margin was 16.8% for fiscal 2013, compared to 8.6% last year. These increases are due to higher revenue, change in product mix, and the conversion to a variable cost operating model in which substantially all of the satellite products are now manufactured by off-shore subcontractors.

    See also Note 13 to the accompanying consolidated financial statements for additional operating data by business segment.

Operating Expenses

    Consolidated research and development (“R&D”) expense increased by $3.0 million to $14.3 million in fiscal 2013 from $11.3 million in fiscal 2012. This increase is due primarily to increased salaries expense from additional R&D personnel in the MRM business and higher consulting and outside services.

    Consolidated selling expenses increased by $1.6 million to $12.7 million this year from $11.1 million last year. This increase is due primarily to higher payroll expense as a result of additional sales personnel and higher sales commission expense.

    Consolidated general and administrative expenses ("G&A") increased by $1.2 million to $12.2 million this year from $11.0$77.9 million last year due to higher stock-based compensation, consulting and outside service expenses. Stock-based compensation expenserevenue, as described above. Wireless DataCom gross margin increased by $389,000to 38.1% in fiscal 2013 due primarily to the remeasurement and acceleration of expense recognition of the equity awards held by the Company’s former CEO.

    Amortization of intangibles increased2016 from $1,277,00036.6% last year to $1,743,000 this year. These increases are attributable to the current year amortization expense related to the intangibles acquired pursuant to the Navman Wireless Asset Purchase Agreement, partially offset by the effect of some intangible assets that became fully amortized in fiscal 2012.

Non-operating Expense, Net

    Non-operating expense decreased from $2.1 million last year to $0.5 million this year. This decrease is attributable to lower interest expense in the current year due to lower debt balancesrevenue mix changes and borrowing rates, and the fact that last year’s non-operating expense included $0.8 million of cumulative foreign currency translation account losses related to the Company’s investment in its French subsidiary that were written off as a result of the decision to shut down this subsidiary and a $0.5 million write-off of the remaining unamortized debt discount and issue costs on the 12% subordinated notes payable that were repaid during fiscal 2012.

Income Tax Provision

    During fiscal 2013 the Company reversed a portion of its deferred tax asset valuation allowance corresponding to the amount of NOLs utilized to offset taxable income. In addition, pursuant to the fiscal 2013 evaluation of the future utilizability of deferred tax assets, the Company reversed substantially all of the remaining valuation allowance at the end of fiscal 2013, resulting in an income tax benefit of $29.2 million for the year. Beginning in fiscal 2014, the Company expects that its effective income tax rate will revert to a more typical level of around 40% based on full federal and state statutory tax rates.

21


Fiscal Year 2012 compared to Fiscal Year 2011

Revenue

    Wireless DataCom revenue increased by $20.7 million, or 26%, to $99.1 million in fiscal 2012 compared to fiscal 2011. The MRM business contributed significantly to the increased revenue through the addition of new customers and growth in orders from existing customers. The remaining Wireless DataCom revenue increase was attributable to higher sales of the Wireless Networks business with significant contribution from a Positive Train Control project, which accounted for $3.3 million of the year-over year revenue increase, and revenue of $3.0 million from the sale of patents in the second quarter of fiscal 2012.

    Satellite revenue increased by $3.7 million, or 10%, to $39.6 million in fiscal 2012 compared to fiscal 2011. This increase was attributable in part to the launch of a new home video and data networking product that the Company began shipping to its key satellite customer in the fourth quarter of fiscal 2012.

Gross Profit and Gross Margins

    Wireless DataCom gross profit increased by $10.7 million to $38.6 million in fiscal 2012 compared to $27.9 million in fiscal 2011, and gross margin improved to 39.0% in fiscal 2012 from 35.6% in fiscal 2011 due primarily to increased absorption of fixed manufacturing costs on higher revenue and revenue of $3.0 million from the sale of patents in fiscal 2012 for which there was no corresponding cost of revenues.revenue.

Satellite gross profit increased by $1.8$1.5 million to $3.4$11.0 million in fiscal 20122016 compared to $1.6$9.5 million last year. Satellite's gross margin increased to 27.9% in fiscal 2016 from 25.4% last year which is attributable to changes in product mix due to the new product introduced in the second half of fiscal 2015.

Operating Expenses

Consolidated research and development (“R&D”) expense decreased slightly to $19.8 million in fiscal 2011. Gross margin2016 from $19.9 million last year due primarily to staff reductions from ongoing operational integration.

Consolidated selling expenses increased by $3.0 million to $23.4 million in fiscal 2016 from $20.4 million in fiscal 2015 due primarily to higher marketing-related expenses and stock compensation expenses.

Consolidated general and administrative expenses (“G&A”) increased by $9.5 million to $25.1 million in fiscal 2016 compared to $15.6 million in fiscal 2015 due primarily to acquisition expenses of $2.0 million related to the acquisition of LoJack which was consummated shortly after the end of fiscal 2016, higher legal expense related to a patent infringement lawsuit, a litigation provision of $2.9 million related to such lawsuit and higher stock compensation expenses.

Amortization of intangibles was almost unchanged at $6.6 million in fiscal 2016 and 2015 as the net result of some intangible assets becoming fully amortized and the amortization of a new intangible associated with the acquisition of Crashboxx in the fiscal 2016 first quarter.

Non-operating Expense, Net

Investment income was $1.9 million in fiscal 2016 compared to investment income of $0.2 million last year due to the unrealized gain of $1.4 million on 850,100 shares of LoJack common stock purchased in the open market in November and December 2015 and investment income of $0.8 million on the net proceeds of the Satellite businessconvertible notes issued in May 2015. Offsetting the income from these investments was the loss on deferred compensation plan Rabbi Trust assets of $0.4 million in fiscal 2016, compared to investment income on Rabbi Trust assets of $0.2 million in fiscal 2015. The Company is informally funding its deferred compensation plan obligations by making cash deposits to a Rabbi Trust that are invested in various equity, bond and money market mutual funds in generally the same proportion as investment elections made by the participants for their compensation deferrals.

Interest expense increased to 8.6%$7.6 million in fiscal 2012 from 4.6%2016 compared to $0.3 million last year due to stated interest expense of $2.3 million, and amortization of debt discount and issue cost of $5.2 million associated with the convertible notes issued in May 2015.

Income Tax Provision

The effective income tax rate was 20.5% in fiscal 20112016 compared to 33.4% last year. The decrease in the effective tax rate is primarily attributable to a $2.5 million reduction in the deferred tax assets valuation allowance as a result of the Company’s transitionassessment of the future realizability of its deferred tax assets.

Fiscal Year 2015 compared to Fiscal Year 2014

Revenue

Wireless DataCom revenue increased by $26.1 million, or 14%, to $213.1 million in fiscal 20122015 compared to $187.0 million in fiscal 2014. These increases were due primarily to the revenue generated from a variable cost operating modelmajor original equipment manufacturer in which substantially allthe heavy equipment industry as it increased its purchases from us, as well as increased sales of MRM products into the Usage Based Insurance (“UBI”), fleet management and asset tracking markets and to increased demand from a key customer in the solar energy industry.

26


Satellite revenue decreased by $11.4 million, or 23%, to $37.5 million in fiscal 2015 compared to $48.9 million in fiscal 2014 due primarily to fluctuations in product demand and product transitions on the part of the satellite products are manufacturedSatellite segment’s principal customer.

Gross Profit and Gross Margins

Wireless DataCom gross profit increased by off-shore subcontractors.$7.8 million to $77.9 million in fiscal 2015 from $70.1 million in fiscal 2014 due to higher revenue, as described above. Wireless DataCom gross margin decreased slightly to 36.6% in fiscal 2015 from 37.5% in fiscal 2014 due to changes in product mix.

Satellite gross profit decreased by $0.3 million to $9.5 million in fiscal 2015 compared to $9.8 million in fiscal 2014. Satellite's gross margin increased to 25.4% in fiscal 2015 from 20.1% in fiscal 2014 which is attributable to changes in product mix and product cost reductions.

Operating Expenses

Consolidated R&D expense increased 2%decreased to $11.3$19.9 million in fiscal 20122015 from $11.1$21.1 million in fiscal 20112014 due primarily to severance costs arising from personnelstaff reductions and the absorption of engineering time on customer product development and internal-use software projects in the Satellite business ($116,000) and higher 401(k) plan employer contribution expense ($91,000) due to reinstatement of 401(k) employer matching contributions in January 2011 following a period of approximately 21 months during which matching contributions were suspended.fiscal 2015.

Consolidated selling expenses increased from $10.5by $0.6 million to $20.4 million in fiscal 2011 to $11.12015 from $19.8 million in fiscal 20122014 due primarily to higher payroll expense as a result of additional sales personnel.marketing-related expenses.

Consolidated G&A expense increased by $2.1$1.2 million to $11.0$15.6 million in fiscal 20122015 compared to $14.4 million in fiscal 2014 due primarily to higher payrolllegal and legalstock compensation expenses. Higher G&A payroll expense was primarily due to incentive expenses recorded in fiscal 2012 as a result of the Company’s improving profitability and hiring additional personnel. Legal expense was higher in fiscal 2012 because legal expense in fiscal 2011 was reduced by $230,000 due to an indemnification settlement entered into with another company involving defense costs, and also due to legal expense incurred in fiscal 2012 in connection with the shut-down of the Company’s French subsidiary.

Amortization of intangibles increased from $1.1to $6.6 million in fiscal 2011 to $1.32015 from $6.3 million in fiscal 2012. The increase was attributable2014 due to the amortization of intangible assets that arose in conjunction with the Dataradio tradename asset over a periodacquisition of seven years commencingRadio Satellite Integrators, Inc. in December 2013.

Non-operating Expense, Net

Non-operating expense, net decreased to $140,000 in fiscal 2012. Previously this tradename asset was classified as an indefinite-lived asset and accordingly it was not being amortized prior2015 compared to $432,000 in fiscal 2014 due primarily to higher investment income in fiscal 2015 compared to fiscal 2012.

Non-operating Expense, Net

    Non-operating2014 and lower interest expense increased from $1.4 million in fiscal 2011 to $2.1 million in2015 compared fiscal 2012 due to cumulative foreign currency translation account losses2014 because of $0.8 million related tothe payoff of the Company’s investment in its French subsidiary that were written off inbank term loan during the secondthird quarter of fiscal 2012 as a result of the decision to dissolve this subsidiary.2014.

Income Tax Provision

    NoThe effective income tax provisionrate was recorded during33.4% in fiscal 2012, other2015 compared to 34.1% in fiscal 2014. The Company’s effective tax rate is lower than minimumthe combined U.S. statutory federal and state income tax rate of approximately 41% due primarily to research and federal incomedevelopment tax credits and because no foreign taxes because of the existence ofwere provided for certain foreign earnings that are sheltered by foreign net operating loss carryforwards that offset pretax income. Thefor which no tax benefit of $172,000 in fiscal 2011 was related to the carryback of net operating losses of the Company’s French subsidiary.previously recognized.

22


Liquidity and Capital Resources

    On March 1, 2013,In May 2015, the Company issued $172.5 million aggregate principal amount of 1.625% convertible senior unsecured notes due May 15, 2020. The convertible notes were sold in a private placement under a purchase agreement between the Company and J.P. Morgan Securities LLC and Jefferies LLC as representatives of several purchasers.

The Company used $31.3 million of the net proceeds from the offering of the convertible notes to pay the cost of a privately-negotiated convertible note hedge. In addition, proceeds of $16.0 million were received by the Company from the sale of warrants pursuant to warrant transactions. The Company has used, and expects to continue to use, the remaining net proceeds from the offering of the convertible notes for general corporate purposes including, but not limited to, acquisitions or other strategic transactions and working capital. See Note 8 to the accompanying consolidated financial statements for further description of the note hedges and warrants.

27


As described in Note 18 to the accompanying consolidated financial statements, on March 18, 2016 we completed the acquisition of LoJack. We funded the acquisition from on-hand cash, cash equivalents and marketable securities. The total purchase price was $130.7 million which included the $5.5 million fair value of 850,100 shares of LoJack common stock that were purchased by CalAmp in the open market in November and December 2015, prior to entering into a definitive acquisition agreement with LoJack.

The Company has a credit facility with Square 1 Bank entered into the Eighth Amendment (the “Eighth Amendment”) to the Loan and Security Agreement dated as of December 22, 2009 (as amended by the Eighth Amendment, the “Amended Loan Agreement”). The Eighth Amendment increased the maximum credit limit of the facility from $12 millionthat provides for borrowings up to $15 million lowered the interest rate on outstanding borrowings from prime plus 1.0% to prime, and extended the facility maturity date from August 15, 2014 to March 1, 2017. The Eighth Amendment provided for a new $5 million term loan (the “New Term Loan”) that was fully funded on March 4, 2013, which was just after the end of fiscal 2013. Concurrent with funding the New Term Loan, the pre-existing term loan with an outstanding principal balance of $1.8 million was retired. Principal of the New Term Loan is repayable at the rate of $83,333 per month beginning April 2013, with a $1.1 million principal payment due at maturity. The revolver portion of the Amended Loan Agreement has a borrowing limit equal to the lesser of (a) $15 million minus the term loan principal outstanding at any point in time, or (b) 85% of eligible accounts receivable.receivable, whichever is less. The credit facility expires on March 1, 2017. Borrowings under this line of credit bear interest at the bank’s prime rate. There were no borrowings outstanding on the revolverunder this credit facility at the end of fiscal 2013 or 2012. Interest is payable on the last day of each calendar month. February 28, 2016 and 2015.

The Company agreed to pay loan fees to Square 1 Bank in connection with the Eighth Amendment of $7,500 on the first anniversary and $37,500 on each of the next three anniversaries of the New Term Loan.

    The Amended Loan Agreementcredit facility contains financial covenants that require the Company to maintain a minimum level of earnings before interest, income taxes, depreciation, amortization and other noncash charges ("EBITDA"(“EBITDA”) and a minimum debt coverage ratio, both measured monthly beginning March 2013 on a rolling 12-month basis. At and subsequent to February 28, 2013,2016, the Company was in compliance with its debt covenants under the credit facility.

The Company'sCompany’s primary sources of liquidity are its cash, and cash equivalents, marketable securities and the revolving line of credit with Square 1 Bank. During fiscal 2013,the year ended February 28, 2016, cash and cash equivalents increased by $57.5$105.2 million. During this period, cashThe increase was provided by operations inprimarily due to the amount of $14.4 million, net proceeds from the saleissuance of common stockconvertible notes of $44.8$167.2 million net of issuance costs, proceeds from the issuance of warrants of $16.0 million, proceeds from exercise of stock options and warrants of $2.8$1.3 million and collections on a note receivablecash provided by operations of $0.5$47.4 million, partially offset by $1.0net purchases of marketable securities of $78.5 million, cash paid pursuant to the Navman Wireless Asset Purchase Agreement, debt repayments$31.3 million cost of $1.7 million,the note hedges, capital expenditures of $1.9$4.3 million, and paymentpurchases of employee withholdingLoJack common stock of $4.1 million, taxes on thepaid related to net share settlement of vested equity awards of $2.6 million.

    On March 4, 2013,million, cash of $2.2 million used for the Company completedequity investment in affiliate, payment of an acquisition-related note and contingent consideration of $2.0 million, and cash used for the acquisition of all outstanding capital stockCrashboxx of Wireless Matrix. Under the terms of the agreement, the Company acquired Wireless Matrix for a cash payment of $52.9 million, subject to adjustment. The assets acquired by the Company included cash of approximately $6$1.5 million. The Company funded the purchase price from the net proceeds of its recently completed equity offering of $44.8 million, the net proceeds from the New Term Loan, and cash on hand.

Off-Balance Sheet Arrangements

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

Contractual Obligations

Following is a summary of the Company's contractual cash obligations as of February 28, 20132016 (in thousands):

Payments Due by Period
MoreFuture Estimated Cash Payments Due by Period
Less thanthan 5
Contractual Obligations      1 year     1-3 years     3-5 years     years     Total 1 year     2-3 years     4-5 years     Total
Bank term loan$917$883$-- 1,800
Note payable to Navman 1,407 2,058--3,465
Convertible senior notes principalConvertible senior notes principal$-$-$      172,500$      172,500
Convertible senior notes stated interestConvertible senior notes stated interest2,803      5,6064,20512,614
Operating leasesOperating leases1,0871,751404 -3,242Operating leases2,2373,3659486,550
Purchase obligationsPurchase obligations32,853---32,853Purchase obligations      39,768--39,768
Other contractual commitmentsOther contractual commitments3,470--3,470
Total contractual obligationsTotal contractual obligations$     36,264$     4,692$     404$     -$     41,360Total contractual obligations$48,278$8,971$177,653$234,902

Purchase obligations consist primarily of inventory purchase commitments.



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk

The Company has international operations, giving rise to exposure to market risks from changes in foreign exchange rates. A cumulative foreign currency translation loss of $65,000$226,000 related to the Company's Canadian subsidiaryand United Kingdom subsidiaries is included in accumulated other comprehensive loss in the stockholders' equity section of the consolidated balance sheet at February 28, 2013. Foreign currency gains (losses)2016. The aggregate foreign transaction exchange rate losses included in the consolidated statements of operationsdetermining income before income taxes were $(43,000), $(45,000)$27,000, $53,000 and $40,000$62,000 in fiscal 2013, 2012years 2016, 2015 and 2011,2014, respectively. In addition, during fiscal 2012 the Company wrote off $801,000 of cumulative foreign currency translation losses related to its French subsidiary as a result of the decision to dissolve this subsidiary.

28


Interest Rate Risk

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

The Company has variable-rate bank debt. A fluctuation of one percent in the interest rate on the $15 million credit facility with Square 1 Bank would have an annual impact of approximately $150,000 on the Company's consolidated statement of operations assuming that the full amount of the facility was borrowed. There were no borrowings outstanding on this facility at February 28, 2016.

29



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMReport of Independent Registered Public Accounting Firm

Board of Directors and Stockholders
CalAmp Corp.
Irvine, California

We have audited the accompanying consolidated balance sheet of CalAmp Corp. (the “Company”) as of February 29, 2016 and the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CalAmp Corp. at February 29, 2016, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, the Company changed the classification of deferred taxes in the consolidated balance sheet in 2015, due to the adoption of Accounting Standards Update 2015-17,Balance Sheet Classification of Deferred Taxes. This change was applied retrospectively to all periods presented.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), CalAmp Corp.’s internal control over financial reporting as of February 29, 2016, based on criteria established inInternal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated April 19, 2016 expressed an unqualified opinion thereon.

/s/ BDO USA, LLP

Los Angeles, California
April 19, 2016

30


Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders
CalAmp Corp. and Subsidiariessubsidiaries

We have audited the accompanying consolidated balance sheetssheet of CalAmp Corp. and subsidiaries (collectively, the “Company”) as of February 28, 2013 and 2012,2015 and the related consolidated statements of operations, comprehensive income, (loss), stockholders' equity, and cash flows for each of the threetwo years in the period ended February 28, 2013.then ended. These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includesstatements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 28, 2013 and 2012,2015, and the results of its operations and its cash flows for each of the threetwo years in the periodthen ended, February 28, 2013, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, the Company changed the classification of deferred taxes in the consolidated balance sheet in fiscal 2016 due to the adoption of Accounting Standards Update 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). This change was applied retrospectively to all periods presented. We audited the adjustments necessary to retrospectively apply ASU 2015-17 to the 2015 consolidated balance sheet. In our opinion, such adjustments are appropriate and have been properly applied.

    We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of February 28, 2013, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated April 25, 2013 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ SingerLewak LLP

Los Angeles, California
April 25, 2013



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To21, 2015, except for the Boardretrospective adoption of Directors and Stockholders
CalAmp Corp. and Subsidiaries

    We have audited CalAmp Corp. and subsidiaries' (collectively,ASU 2015-17 as to which the “Company”) internal control over financial reporting as of February 28, 2013, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s managementdate is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.April 19, 2016.

    We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.31

    A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

    Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

    In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 28, 2013, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

    We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets as of February 28, 2013 and 2012, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended February 28, 2013 of the Company and our report dated April 25, 2013 expressed an unqualified opinion.

SingerLewak LLP

Los Angeles, California
April 25, 2013



CALAMP CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)

February 28,
February 28, 2013February 28,2016     2015
Assets     Actual     Pro Forma(a)    2012     
(Unaudited)    
Current assets: 
Cash and cash equivalents$     63,101$     19,593$      5,601 $139,388$34,184
Short-term marketable securities88,71810,177
Accounts receivable, less allowance for doubtful accounts of
$461 and $254 at February 28, 2013 and 2012, respectively19,11124,70914,383
$622 and $673 at February 28, 2016 and 2015, respectively49,43247,917
Inventories13,51613,59510,05716,73118,666
Deferred income tax assets6,4006,4005,425
Prepaid expenses and other current assets4,6415,3264,3234,4985,110
Total current assets106,76969,62339,789298,767116,054
Property, equipment and improvements, net of
accumulated depreciation and amortization2,7784,4611,76111,22510,525
Deferred income tax assets, less current portion34,61634,6166,412
Deferred income tax assets30,21334,822
Goodwill1,11218,486-16,50815,483
Other intangible assets, net4,60330,2232,73817,01022,596
Other assets89389378110,6403,137
$150,771$158,302$51,481$      384,363$      202,617
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt$2,261$2,261$1,100
Accounts payable11,87112,5129,523$24,938$24,012
Accrued payroll and employee benefits5,2986,4744,4056,8145,522
Deferred revenue6,4106,4106,3059,43810,748
Other current liabilities3,1095,6232,2688,3756,723
Total current liabilities28,94933,28023,60149,56547,005
Long-term debt2,4345,6341,900
1.625% convertible senior unsecured notes139,800-
Other non-current liabilities1,8391,8391,0035,5514,227
Total liabilities194,91651,232
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;
35,041 and 28,722 shares issued and outstanding
at February 28, 2013 and 2012, respectively 350350287
36,667 and 36,225 shares issued and outstanding
at February 28, 2016 and 2015, respectively367362
Additional paid-in capital202,368202,368 154,485229,159207,881
Accumulated deficit(85,104)(85,104)(129,730)(39,853)(56,793)
Accumulated other comprehensive loss(65)(65)(65)(226)(65)
Total stockholders' equity117,549117,54924,977189,447151,385
$150,771$158,302$51,481$384,363$202,617

(a)On March 4, 2013, which was just after the end of fiscal 2013, the Company took out a $5 million bank term loan and consummated the acquisition of Wireless Matrix for a cash payment of $52.9 million. The amounts in the Pro Forma column give effect to the $5 million bank term loan and the Wireless Matrix acquisition as if both events had occurred on the last day of fiscal 2013. See Note 16 for details of these subsequent events.

See accompanying notes to consolidated financial statements.

32



CALAMP CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

Year Ended February 28,
     2013     2012     2011
Revenues$     180,579$     138,728$     114,333
 
Cost of revenues123,68696,70984,775 
 
Gross profit56,89342,01929,558
 
Operating expenses:
              Research and development14,29111,32811,125
              Selling12,72511,06010,503
              General and administrative12,15410,9848,858
              Intangible asset amortization1,7431,2771,132
Total operating expenses40,91334,64931,618
 
Operating income (loss)15,9807,370(2,060)
 
Non-operating income (expense):
              Interest expense, net(487)(1,261)(1,445)
              Foreign currency translation account write-off-(801)-
              Other income (expense), net(45)(29)50
Total non-operating expense(532)(2,091)(1,395)
 
Income (loss) before income taxes15,4485,279(3,455)
 
Income tax benefit (provision)29,178(61)172
 
Net income (loss)$44,626$5,218$(3,283)
 
Earnings (loss) per share:
              Basic$1.54$0.19$(0.12)
              Diluted$1.49 $0.18$(0.12)
 
Shares used in computing basic and
       diluted earnings (loss) per share:
              Basic28,88627,65827,181
              Diluted29,98228,45827,181

CALAMP CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(IN THOUSANDS)In thousands, except per share amounts)

Year Ended February 28,
201320122011
Net income (loss)$     44,626     $     5,218     $     (3,283)
 
Other comprehensive income, net of tax: 
       Reclassification adjustment for foreign 
       currency loss included in net income-801-
 
Comprehensive income (loss)$44,626$6,019$(3,283)
Year Ended February 28,
     2016     2015     2014
Revenues:
       Products$     237,981$     209,895$     195,549
       Application subscriptions and other services42,73840,71140,354
              Total revenues280,719250,606235,903
 
Cost of revenues:
       Products158,689144,911139,205
       Application subscriptions and other services19,07118,29116,767
              Total cost of revenues177,760163,202155,972
 
Gross profit102,95987,40479,931
 
Operating expenses:
       Research and development19,80319,85421,052
       Selling23,38020,44219,837
       General and administrative25,06515,57814,416
       Intangible asset amortization6,6266,5906,283
              Total operating expenses74,87462,46461,588
 
Operating income28,08524,94018,343
 
Non-operating income (expense):
       Investment income1,87122442
       Interest expense(7,595)(296)(407)
       Other expense(20)(68)(67)
 (5,744)(140)(432)
 
Income before income taxes and equity in net loss of affiliate22,34124,80017,911
 
Income tax provision(4,572)(8,292)(6,108)
 
Income before equity in net loss of affiliate17,76916,50811,803
 
Equity in net loss of affiliate(829)--
 
Net income$16,940$16,508$11,803
 
Earnings per share:
       Basic$0.46$0.46$0.34
       Diluted$0.46$0.45$0.33
 
Shares used in computing earnings per share:
       Basic36,44835,78434,969
       Diluted36,95036,53036,023
 
 
Comprehensive income:
Net income$16,940$16,508$11,803
Other comprehensive loss:
       Foreign currency translation adjustment(161)--
Total comprehensive income$16,779$16,508$11,803

See accompanying notes to consolidated financial statements.

33



CALAMP CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In thousands)

AccumulatedAccumulated
AdditionalOtherTotalAdditionalOtherTotal
Common StockPaid-inAccumulated ComprehensiveStockholders'Common StockPaid-inAccumulatedComprehensiveStockholders'
SharesAmountCapitalDeficitLossEquity  Shares   Amount   Capital   Deficit   Loss   Equity
Balances at February 28, 2010   27,662   $277   $151,453   $(131,665)   $(866)   $19,199
Net loss(3,283)(3,283)
Stock-based compensation expense2,1092,109
Issuance of shares for restricted
stock awards6556(6)-
Shares retained on net share settlement
of equity awards(170)(2)(403)(405)
Other(18)(18)
Balances at February 28, 201128,147281153,135(134,948)(866)17,602
Balances at February 28, 201335,041$       350$     202,368$        (85,104)$                  (65)$          117,549
Net income5,2185,218 11,80311,803
Write-off of currency translation account801801
Stock-based compensation expense2,3752,3752,9242,924
Issuance of shares for restricted
stock awards3544(4)-901(1)-
Shares issued on net share settlement
of equity awards2052(1,037)(1,035)1802(3,059)(3,057)
Exercise of stock options16-272754863,9223,928
Other(11)(11)
Balances at February 28, 201228,722287154,485(129,730)(65)24,977
Balances at February 28, 2014     35,859359206,154(73,301)(65)133,147
Net income44,62644,62616,50816,508
Stock-based compensation expense2,910 2,9104,1004,100
Sale of common stock5,1755244,73244,784
Issuance of shares for restricted
stock awards1602(2)-1061(1)-
Shares issued on net share settlement 
of equity awards and warrants1982 (2,562)(2,560)
Exercise of stock options and warrants786 72,8052,812
Balances at February 28, 2013     35,041$     350$     202,368$     (85,104)$            (65)$     117,549
of equity awards1171(3,089)(3,088)
Exercise of stock options1431717718
Balances at February 28, 201536,225362207,881(56,793)(65)151,385
Net income16,94016,940
Stock-based compensation expense5,8545,854
Equity component of convertible senior
notes, net of tax20,10420,104
Purchase of note hedges, net of tax(19,324)(19,324)
Sale of warrants15,99115,991
Issuance of shares for restricted
stock awards1151(1)-
Shares issued on net share settlement
of equity awards991(2,626)(2,625)
Exercise of stock options22831,2801,283
Foreign currency translation adjustment(161)(161)
Balances at February 28, 201636,667$367$229,159$(39,853)$(226)$189,447

See accompanying notes to consolidated financial statements.

34



CALAMP CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Year Ended February 28,Year Ended February 28,
201320122011201620152014
CASH FLOWS FROM OPERATING ACTIVITIES:                         
Net income (loss)$     44,626$     5,218$     (3,283)
Adjustments to reconcile net income (loss) 
Net income$     16,940$     16,508$     11,803
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization2,7642,4472,543
Depreciation expense3,5822,7961,822
Intangible assets amortization expense6,6266,5906,283
Stock-based compensation expense2,9102,3752,1095,8544,1002,924
Amortization of debt issue costs and discount397747536
Write-off of currency translation account of foreign subsidiary-801-
Amortization of convertible debt issue costs and discount5,201--
Deferred tax assets, net(29,231)-8074,1227,9275,935
Unrealized gain on investment in LoJack common stock(1,416)--
Equity in net loss of affiliate829--
Other1419(20)(66)247339
Changes in operating assets and liabilities:
Accounts receivable(4,728)2,431(294)(1,515)(11,058)(11,401)
Inventories(3,459)(167)7181,935(3,704)(1,301)
Prepaid expenses and other assets(887)991(510)(280)(2,076)(594)
Accounts payable2,348(4,580)(2,083)9263,5047,522
Accrued liabilities1,7381,641(722)5,9721,314(1,449)
Deferred revenue1055091,056(1,310)2,497933
NET CASH PROVIDED BY OPERATING ACTIVITIES16,59712,43285747,40028,64522,816
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of marketable securities71,99115,145-
Purchases of marketable securities(150,532)(16,304)(9,018)
Capital expenditures(1,852)(1,076)(1,245)(4,317)(7,437)(2,133)
Navman Wireless asset purchase(1,000)--
Collections on note receivable462566428
Acquisitions net of cash acquired(1,500)-(52,954)
Purchase of LoJack common stock(4,050)--
Purchase of equity investment in affiliate(2,156)--
Other(8)-32(110)(55)(71)
NET CASH USED IN INVESTING ACTIVITIES(2,398) (510)(785)(90,674)(8,651)(64,176)
CASH FLOWS FROM FINANCING ACTIVITIES:  
Net proceeds from sale of common stock44,784--
Net proceeds (repayments) of bank line of credit-(7,489)1,588
Net proceeds (repayments) of bank term loan(1,200)3,000-
Repayment of notes payable(535)(5,000)-
Payment of debt issue costs-(65)-
Taxes paid related to net share settlement of equity awards(2,560)(1,035)(405)
Proceeds from exercise of stock options and warrants2,81227-
Proceeds from issuance of convertible notes172,500--
Payment of debt issuance costs(5,291)--
Purchase of convertible note hedges(31,343)--
Proceeds from issuance of warrants15,991--
Net repayments of bank term loan--(1,800)
Payment of acquisition-related note and contingent consideration(2,037)(2,673)(1,579)
Taxes paid related to net share settlement of vested equity awards(2,625)(3,088)(3,057)
Proceeds from exercise of stock options1,2837183,928
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES43,301(10,562)1,183148,478(5,043)(2,508)
Net change in cash and cash equivalents57,5001,3601,255105,20414,951(43,868)
Cash and cash equivalents at beginning of year5,6014,2412,98634,18419,23363,101
Cash and cash equivalents at end of year$63,101$5,601$4,241$139,388$34,184$19,233

See accompanying notes to consolidated financial statements.

35



CALAMP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Description of Business

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

On March 18, 2016, we completed the acquisition of LoJack Corporation (“LoJack”). This strategic acquisition is consistent with our long-term growth strategy. CalAmp's leading portfolio of wireless connectivity devices, software, services and applications, combined with LoJack’s world-renowned brand, proprietary stolen vehicle recovery product, unique law enforcement network and strong relationships with auto dealers, heavy equipment providers and global licensees, will create a market leader that is well-positioned to drive the broad adoption of connected car solutions and vehicle telematics technologies and applications worldwide.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company (a Delaware corporation) and its subsidiaries, all of which are wholly-owned. All significant intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. Areas where significant judgments are made include, but are not necessarily limited to, allowance for doubtful accounts, inventory valuation, product warranties, deferred income tax asset valuation allowances, valuation of purchased intangible assets and other long-lived assets, stock-based compensation, and revenue recognition.

Fiscal Year

    TheEffective at the end of fiscal 2015, the Company useschanged its fiscal year-end from a 52-53 week fiscal year ending on the Saturday that falls the closest to February 28 which forto a fiscal years 2013, 2012 and 2011 fellyear ending on March 2, 2013, February 25, 2012, and February 26, 2011, respectively.the last day of February. In these consolidated financial statements, the fiscal year end for all years is shown as February 28 for clarity of presentation. Fiscal 2013 consisted of 53 weeks, while fiscal years 2012The actual period end dates are February 29, 2016, February 28, 2015 and 2011 each consisted of 52 weeks.March 1, 2014.

Revenue Recognition

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

In addition to product sales, the limited number of instances whereCompany provides Software as a Service (SaaS) subscriptions for its fleet management and vehicle finance applications in which customers have a right of return period, revenue is not recognized untilare provided with the expiration of such period.

ability to wirelessly communicate with monitoring devices installed in vehicles and other mobile or remote assets via software applications hosted by the Company at independent data centers. The Company defers the recognition of revenuesrevenue for the products that are sold with data communication servicesapplication subscriptions because the servicesproducts are essential tonot functional without the functionality of the products, and accordingly,application services. In such circumstances, the associated product costs are recorded as deferred costs.costs in the balance sheet. The deferred product revenue and deferred product cost amounts are recognizedamortized to application subscriptions revenue and cost of revenue on a straight-line basis over the minimum contractual service periodsubscription periods of one year.to five years. Revenues from renewals of data communication services after the initial one yearcontract term are recognized as application subscriptions revenue when the services are provided. When customers prepay data communication serviceapplication subscription renewals, such amounts are recorded as deferred revenues and are recognized over the renewal term.

    The Company also undertakes projects that include the development of communication systems used for public safety and transportation applications that are designed to customers' specifications or that involve fixed site construction. Sales under such contracts are recorded under the percentage-of-completion method. Costs and estimated revenues are recorded as work is performed based on the percentage that incurred costs bear to estimated total costs utilizing the most recent estimates of costs. If the current estimate of percentage complete and total estimated costs for a given contract indicates a loss, provision is made in the current period for the total anticipated loss on such contract. Costs and estimated earnings in excess of billings on uncompleted contracts arise when contract revenues have been recognized on the percentage-of-completion method in advance of when the amounts can be invoiced to the customers under the terms of the contracts. Such amounts are billable to the customers upon various measures of performance, including achievement of certain milestones, completion of specified units, or completion of a contract. Costs and estimated earnings in excess of billings on uncompleted contracts are included in prepaid expenses and other current assets in the accompanying consolidated balance sheets.

3136


Cash and Cash Equivalents

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

Concentrations of Risk

    At February 28, 2013, the Company’s cashCash and cash equivalents wereare maintained inwith several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions thatof reputable credit, and are insured uptherefore considered by management to the limit determined by the appropriate governmental agency.bear minimal credit risk.

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents, marketable securities and trade receivables.

    BecauseEchoStar accounts for essentially all of the Company sells into markets dominated by a few large service providers, a significant percentagerevenue of CalAmp’s Satellite segment. EchoStar accounted for 14%, 15% and 21% of consolidated revenues in fiscal years 2016, 2015 and consolidated accounts receivable relate2014, respectively. Subsequent to the end of fiscal 2016, EchoStar notified CalAmp that it will discontinue purchasing products from CalAmp at the end of the current product demand forecast as a small numberresult of customers. Customersits reduced demand for the products that CalAmp currently supplies. The Company is currently evaluating its Satellite business and expects that this portion of its operations will be discontinued during fiscal 2017. See Note 18 - Subsequent Events.

EchoStar accounted for 10% or more of consolidated annual revenues in any one of the last three years are as follows:

                    Year ended February 28,
 Customer 2013     2012     2011
A22.1%28.3%31.0%

    Customers that accounted for 10% or moreand 12% of consolidated net accounts receivable in any one of the last two years are as follows:

               February 28,
Customer     2013     2012
A18.4%33.4%
B6.6%11.1%

    Customer A is aat February 28, 2016 and 2015, respectively. One customer of the Company's SatelliteCompany’s Wireless DataCom segment accounted for 15% of consolidated net accounts receivable at both February 28, 2016 and Customer B is a customer2015.

Some of the Wireless DataCom segment.

    ACompany’s components, assemblies and electronic manufacturing services are purchased from sole source suppliers. In addition, a substantial portion of the Company’s inventory is purchased from one supplier whichthat functions as an independent foreign procurement agent and contract manufacturer. This supplier accounted for 54%56%, 59% and 50%65% of the Company's total inventory purchases in fiscal 2013years 2016, 2015 and 2012,2014, respectively. As of February 28, 2013,2016, this supplier accounted for 63%57% of the Company's total accounts payable.

    Some Another supplier accounted for 16% of the Company's components, assembliesCompany’s total inventory purchases in fiscal 2016 and electronic manufacturing services are purchased from sole source suppliers.15% of the Company’s total accounts payable as of February 28, 2016.

Allowance for Doubtful Accounts

The Company establishes an allowance for estimated bad debts based upon a review and evaluation of specific customer accounts identified as having known or expected collection problems based on historical experience or due to insolvency, disputes or other collection issues.

Inventories

    Inventories include costs of materials, labor and manufacturing overhead. Inventories are stated at the lower of cost or net realizable value, with cost determined principally by the use of the first-in, first-out method.

32


Property, equipment and improvements

Property, equipment and improvements are stated at the lower of cost or fair value determined through periodic impairment analyses. The Company follows the policy of capitalizing expenditures that increase asset lives, and expensing ordinary maintenance and repairs as incurred. The Company has capitalized certain internal use software which is included in property and equipment.

Depreciation and amortization are based upon the estimated useful lives of the related assets, with such amounts computed using the straight-line method. Plant equipment and office equipment are depreciated over useful lives ranging from two to five years, while tooling is depreciated over 18 months. Leasehold improvements are amortized over the shorter of the lease term or the useful life of the improvements.

The Company capitalizes certain costs incurred in connection with developing or obtaining internal-use software and software that are embedded in a product and sold as part of the product as a whole. These costs are included in Property, Equipment and Improvements in the consolidated balance sheets and are amortized over useful lives ranging from three to seven years. 

37


Operating Leases

Rent expense under operating leases is recognized on a straight-line basis over the lease term. The difference between therecognized rent expense and the rent payment amount is recorded as an increase or decrease in the deferred rent liability.

The Company accounts for tenant allowances in lease agreements as a deferred rent credit, which is amortized on a straight-line basis over the lease term as a reduction of rent expense.

Goodwill and Other Intangible Assets

Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible assets and identifiable intangible assets of businesses acquired. Goodwill is not amortized. Instead, goodwill is tested for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company performs its goodwill impairment test in the fourth quarter of each year. The Company did not recognize any impairment charges related to goodwill during fiscal years 2016, 2015 and 2014.

The cost of definite-lived identified intangible assets is amortized over the assets' estimated useful lives ranging from onetwo to seven years on a straight-line basis as no other discernible pattern of usage is more readily determinable.

Accounting for Long-Lived Assets

The Company reviews property and equipment and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts of an asset may not be recoverable. Recoverability is measured by comparison of the asset's carrying amount to the undiscounted future net cash flows an asset is expected to generate. If a long-lived asset or group of assets is considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset or asset group exceeds the discounted future cash flows that are projected to be generated by the asset or asset group.

Disclosures About Fair Value of Financial InstrumentsMeasurements

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

Level 1 – Quoted prices in active markets for which it is practicable to estimate:identical assets or liabilities.

Level 2 Cash– Observable inputs other than quoted prices in active markets for identical assets and cash equivalents, accounts receivableliabilities, 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 accounts payable - The carrying amount is a reasonabletypically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

In accordance with the fair value givenaccounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has elected the short maturity of these instruments.

    Debt - The estimated fair value option for its investment in marketable securities on a contract-by-contract basis at the time each contract is initially recognized in the financial statements or upon an event that gives rise to a new basis of accounting for the Company's bank debt approximates the carrying value of such debt because the interest rate is variable and is market-based.items.

38


Warranty

The Company generally warrants its products against defects over periods ranging from 312 to 24 months. An accrual for estimated future costs relating to products returned under warranty is recorded as an expense when products are shipped. At the end of each fiscal quarter, the Company adjusts its liability for warranty claims based on its actual warranty claims experience as a percentage of revenues for the preceding one to two years and also considers the impact of the known operational issues that may have a greater impact than historical trends. The warranty reserve is included in Other Current Liabilities in the consolidated balance sheets. See Note 1013 for a table of annual increases in and reductions of the warranty reserve for the last three years.



Deferred Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and for income tax purposes. The Company evaluates the realizability of its deferred income tax assets and a valuation allowance is provided, as necessary. In assessing this valuation allowance, the Company reviews historical and future expected operating results and other factors, including its recent cumulative earnings experience, expectations of future taxable income by taxing jurisdiction and the carryforward periods available for tax reporting purposes, to determine whether it is more likely than not that deferred tax assets are realizable. Pursuant to the evaluation conducted for fiscal 2013, the Company eliminated substantially all of the valuation allowance for deferred income tax assets at the end of fiscal 2013, resulting in an income tax benefit of $29.2 million for the year.

Foreign Currency Translation and Accumulated Other Comprehensive Income (Loss)Loss Account

    The Company's French subsidiary uses the U.S. dollar as its functional currency. As a result of changing the functional currency of the Company's French subsidiary from the French franc to the U.S. dollar in 2002, the foreign currency translation loss of $801,000 was included in accumulated other comprehensive loss in the stockholders’ equity section of the balance sheet. During fiscal 2012, the Company wrote off the $801,000 foreign currency translation loss as a result of the decision to shut down this French subsidiary. This subsidiary was dissolved in fiscal 2013.

The Company's Canadian subsidiary changed its functional currency from the Canadian dollar to the U.S. dollar effective at the end of fiscal 2010. The cumulative foreign currency translation loss of $65,000 that is included in accumulated other comprehensive loss will remain unchangedthere for such time that the Canadian subsidiary continues to be part of the Company's consolidated financial statements.

The Company's New Zealand branch uses the U.S. dollar as its functional currency.

The Company’s United Kingdom subsidiary uses the British pound, the local currency, as its functional currency. Its financial statements are translated into U.S. dollars using current or historical rates, as appropriate, with translation gains or losses included in the accumulated other comprehensive loss account in the stockholders’ equity section of the consolidated balance sheet. Cumulative foreign currency loss as of February 28, 2016 amounted to $161,000.

The aggregate foreign transaction exchange gains (losses)rate losses included in determining income (loss) before income taxes were $(43,000), $(45,000)$27,000, $53,000 and $40,000$62,000 in fiscal 2013, 2012years 2016, 2015 and 2011,2014, respectively.

Earnings Per Share

    Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution, using the treasury stock method, that could occur if stock options and stock purchase warrants were exercised. In computing diluted earnings per share, the treasury stock method assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options and warrants will have a dilutive effect under the treasury stock method only when the Company reports net income and the average market price of the common stock during the period exceeds the exercise price of the derivative securities.

Stock-Based Compensation

The Company measures stock-based compensation expense at the grant date, based on the fair value of the equity award, and recognizes the expense over the employee's requisite service (vesting) period using the straight-line method. The measurement of stock-based compensation expense is based on several criteria including, but not limited to, the type of equity award, the valuation model used and associated input factors, such as expected term of the award, stock price volatility, risk free interest rate and forfeiture rate. Certain of these inputs are subjective to some degree and are determined based in part on management's judgment. The Company recognizes the compensation expense on a straight-line basis for its graded-vesting awards. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. However, the cumulative compensation expense recognized atin any point in timeperiod must at least equal the portion of the grant-date fair value associated with equity awards that are vested as of the award that is vested at thatsuch period-end date. As used in this context, the term "forfeitures"“forfeitures” is distinct from "cancellations"“cancellations” or "expirations"“expirations”, and refers only to the unvested portion of the surrendered equity awards.

Business Combinations

The Company applies the provisions of ASC 805, Business Combinations, in the accounting for its acquisitions, which requires recognition of the assets acquired and the liabilities assumed at their acquisition date fair values, separately from goodwill. Goodwill as of the acquisition date is measured as the excess of consideration transferred andover the net of the acquisition date fair values of the tangible and identifiable intangible assets acquired and liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period which may bethat exists up to one year12 months from the acquisition date, the Company recordsmay record adjustments to the tangible and specifically identifiable intangible assets acquired and liabilities assumed with thea corresponding offsetadjustment to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired orand liabilities assumed, whichever comes first, the impact of any subsequent adjustments is included in the consolidated statements of operations. 

39



Costs to exit or restructure certain activities of an acquired company or the Company’s internal operations are accounted for as a one-time termination and exit costscost pursuant to ASC 420, Exit“Exit or Disposal Cost Obligations,Obligations”, and are accounted for separately from the business combination. A liability for costs associated with an exit or disposal activity is recognized and measured at its fair value in the Company’s consolidated statement of operations in the period in which the liability is incurred.

Uncertain income tax positions and tax-related valuation allowances assumedthat are acquired in connection with a business combination are initially estimated as of the acquisition date. The Company reevaluates these items quarterly based upon facts and circumstances that existed as of the acquisition date, with any adjustments to the preliminary estimates being recorded to goodwill provided that it issuch adjustments occur within the 12 month measurement period. Subsequent to the end of the measurement period or the Company’s final determination of the value of the tax allowance or contingency, whichever comes first, changes to these uncertain tax positions and tax-related valuation allowances will affect the provision for income taxes in the consolidated statement of operations, and could have a material impact on results of operations and financial position.

RecentRecently Adopted Accounting PronouncementsStandards

In June 2011,April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). The FASB issued ASU 2015-03 to simplify the presentation of debt issuance costs related to a recognized debt liability to present the debt issuance costs as a direct deduction from the carrying value of the debt liability rather than showing the debt issuance costs as a deferred charge on the balance sheet. As permitted by ASU 2015-03, the Company early-adopted this standard with respect to the convertible senior unsecured notes issued in May 2015, as discussed further in Note 8.

In November 2015, the FASB issued Accounting Standards Update 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 amends existing guidance to require that deferred income tax liabilities and assets be classified as noncurrent in a classified balance sheet, and eliminates the prior guidance which required an entity to separate deferred tax liabilities and assets into a current amount and a noncurrent amount in a classified balance sheet. As permitted by ASU 2015-17, the Company early-adopted this standard and applied it retrospectively to all periods presented.

Recently Issued Accounting Standards

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

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

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In May 2014, the FASB issued Accounting Standards Update No. 2011-05, “Comprehensive Income (Topic 220): Presentation2014-09, Revenue from Contracts with Customers. The new revenue recognition standard provides a five-step analysis of Comprehensive Income”.transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of the new revenue standard for periods beginning after December 15, 2016 to December 15, 2017, with early adoption permitted but not earlier than the original effective date. This guidance requires companiesASU must be applied retrospectively to present the components of net income and other comprehensive income either as one continuous statementeach period presented or as two consecutive statements. It eliminates the option to present components of other comprehensive incomea cumulative-effect adjustment as part of the statementdate of changesadoption. The Company is continuing to evaluate the effect and methodology of adopting this new accounting guidance on its results of operations, cash flows and financial position.

Reclassifications

Certain amounts in stockholders' equity. The standard does not change the items which must be reported in other comprehensive income, how such items are measured or when they must befinancial statements of prior years have been reclassified to conform to the fiscal 2016 presentation, with no effect on net income. The Company adopted this pronouncement in the first quarter of fiscal 2013.earnings.

NOTE 2 – SUPPLY AGREEMENT AND ACQUISITIONACQUISITIONS

Crashboxx acquisition

On May 7, 2012,April 17, 2015, the Company entered intoacquired certain intangible assets from a five-year supply agreement (the “Supply Agreement”)company doing business as Crashboxx to provide at least $25advance its insurance telematics strategy for a cash payment of $1.5 million and future earn-out payments. The aggregate estimated fair value of fleet tracking products to Navman Wireless,the earn-out payments is $455,000 based on projected revenues over a privately held company (“Navman”). In conjunction with the Supply Agreement, the Company also entered into an asset purchase agreement on May 7, 2012 with Navman (the “Asset Purchase Agreement”) and established a research and development center in Auckland, New Zealand with an initial staffperiod of 14 employees who transferred from Navman’s workforce.

    The purchase price for the5 years of products and technologiesservices incorporating the acquired technology. The Company acquired developed technology from Navman pursuant to the Asset Purchase Agreement was $4,902,000, comprised of $1,000,000 paid in cash at closing, a non-interest bearing note payableCrashboxx with a presentfair value of $3,080,000 at the time of issuance,$930,000 and paid a premium (i.e. goodwill) over the fair value of estimated contingent royalties considerationthe identified assets acquired. The goodwill of $822,000$1,025,000 is primarily attributable to the benefit of the acquired proprietary automobile accident claims process automation technology. The goodwill arising from this acquisition is deductible for income tax purposes.

Radio Satellite Integrators acquisition

On December 18, 2013, the Company completed the acquisition of all outstanding capital stock of Radio Satellite Integrators, Inc. (“RSI”) for a cash payment at closing of $6.5 million and future earn-out payments based on post-acquisition sales by CalAmp during the first three years of certain products acquired from Navman under the Asset Purchase Agreement. The note payable has a face value of $4,000,000, and is payablegross profit performance in the formaggregate estimated fair value amount of $2.1 million that was paid quarterly over two years. RSI was a 15% rebate on certain products sold by the Companyprivately-held provider of fleet management solutions primarily to Navman under the Supply Agreement.city and county government agencies for applications involving public works, waste management, transit and public safety.

    The Company is accounting for this acquisition under FASB ASC Topic 805, “Business Combinations”, which provides guidance on the accounting and reporting for transactions that represent business combinations to be accounted for under the acquisition method. This method requires that, among other things, assets acquired and liabilities assumed be recorded at their fair values as of the acquisition date. The excess of the consideration transferred over those fair values is recorded as goodwill.



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

Purchase Price          $     4,902
Fair value of net assets acquired:
       Property and equipment$     200
       Supply contract2,220
       Developed/core technology500
       Customer lists710
       Covenants not to compete170
       Assumed liabilities(10)
              Total fair value of net assets acquired3,790
Goodwill$1,112
Purchase price          $     8,563
Less cash acquired(382)
       Net purchase price8,181
Fair value of net assets acquired: 
       Current assets other than cash$     941
       Customer lists3,150
       Developed technology1,970
       Other non-current assets10
       Current liabilities(1,675)
       Deferred tax liabilities, net(1,768)
              Total fair value of net assets acquired2,628
Goodwill$5,553

    The goodwill arising from this transaction is deductible for income tax purposes, and is assigned to the Company’s Wireless DataCom segment. This goodwill is primarily attributable to the benefit of having an assembled workforce in New Zealandto address the Company’s governmental markets and the value that the Company expectsexpected to receivederive from RSI’s customer relationships beyond the current contractual terms of these service agreements. The goodwill arising from this acquisition is not deductible for income tax purposes.

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Wireless Matrix acquisition

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

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

Purchase price          $     52,986
Less cash acquired(6,149)
       Net cash paid46,837
Fair value of net assets acquired:
       Current assets other than cash$     6,353
       Deferred tax assets, net9,437
       Property and equipment1,683
       Customer lists14,440
       Developed technology11,180 
       Other non-current assets144
       Current liabilities(5,218)
              Total fair value of net assets acquired38,019
Goodwill$8,818

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

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NOTE 3 – CASH, CASH EQUIVALENTS AND INVESTMENTS

The following table summarizes the Company’s financial instrument assets using the hierarchy described in Note 1 under the heading “Fair Value Measurements” (in thousands):

As of February 28, 2016
Balance Sheet Classification
of Fair Value
UnrealizedCash andShort-Term
AdjustedGainsFairCashMarketableOther
     Cost     (Losses)     Value     Equivalents     Securities     Assets
Cash$     6,890$       -$     6,890$     6,890$     -$     -
 
Level 1:
       LoJack common stock (1)4,0501,4165,466--5,466
       Mutual funds (2)3,753(383)3,370--3,370
 
Level 2:
       Repurchase agreements130,900-130,900130,900--
       Corporate bonds82,300(16)82,2841,55680,728
       Commercial paper8,032-8,032427,990-
 
Total$235,925$1,017$236,942$139,388$88,718$8,836
 
 
As of February 28, 2015
Balance Sheet Classification
of Fair Value
UnrealizedCash andShort-Term
AdjustedGainsFairCashMarketableOther
Cost(Losses)ValueEquivalentsSecuritiesAssets
Cash$11,384$-$11,384$11,384$-$-
 
Level 1:
       Commercial paper400-400400--
       Mutual funds (2)2,138842,222--2,222
 
Level 2:
       Repurchase agreements22,400-22,40022,400--
       Commercial paper10,184(7)10,177-10,177-
Total$46,506$77$46,583$34,184$10,177$2,222

(1)The Company purchased 850,100 shares of LoJack common stock in the open market in November and December 2015, prior to entering into a definitive agreement to acquire 100% of LoJack. These shares are considered trading securities and were recorded at fair value at the end of fiscal 2016, resulting in a gain of $1.4 million that was recorded as investment income in the consolidated statement of comprehensive income.
(2)The Company has established a non-qualified deferred compensation plan for certain members of management and all non-employee directors. The Company is informally funding its obligations under the deferred compensation plan by purchasing shares in various equity, bond and money market mutual funds that are held in a “Rabbi Trust” and are restricted for payment of obligations to plan participants. See Note 7 for additional information regarding the deferred compensation plan.

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NOTE 4 – INVENTORIES

Inventories consist of the following (in thousands):

February 28,February 28,
     2013     2012     2016     2015
Raw materials$     10,201$     8,648$     14,145$     14,519
Work in process33577180361
Finished goods2,9801,3322,4063,786
$13,516$10,057$16,731$18,666

NOTE 45 – PROPERTY, EQUIPMENT AND IMPROVEMENTS

Property, equipment and improvements consist of the following (in thousands):

February 28,February 28,
     2013     2012     2016     2015
Leasehold improvements$     1,830$     1,725$     1,815$     1,833
Plant equipment and tooling12,43611,17912,54113,355
Office equipment, computers and furniture4,5764,3196,4685,753
Software9,7897,439
18,84217,22330,61328,380
Less accumulated depreciation and amortization(16,064)(15,462)(21,852)(20,177)
$2,778$1,7618,7618,203
Fixed assets not yet in service2,4642,322
$11,225$10,525

Depreciation expense was $3,582,000, $2,796,000 and $1,822,000 in fiscal years 2016, 2015 and 2014, respectively.

Fixed assets not yet in service consist primarily of capitalized internal-use software and certain tooling and other equipment that have not been placed into service.

NOTE 56 – GOODWILL AND OTHER INTANGIBLE ASSETS

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

Year Ended February 28,
     2016     2015
Balance at beginning of year$     15,483$     15,422
Crashboxx acquisition1,025-
Purchase price allocation adjustments-61
Balance at end of year$16,508$15,483

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

February 28, 2013February 28, 2012
GrossGrossGrossAccumulated AmortizationNet
AmortizationCarryingAccumulatedCarryingAccumulatedAmortizationFebruary 28,February 28,February 28,February 28,February 28,
     Period     Amount     Amortization     Net     Amount     Amortization     Net     Period     2015     Additions     Retirements     2016     2015     Expense     Retirements     2016     2016     2015
Supply contract5 years$    2,220$359$    1,861$    -$-$    -5 years$     2,220$     -$         -$     2,220$     1,247$     432$     -$     1,679$     541$     973
Developed/core technology2-7 years3,0012,5724292,8532,154699
Developed technology2-7 years16,151930(3,001)14,0807,1262,302(3,001)6,4277,6539,025
Tradename7 years2,1306091,5212,1303041,8267 years2,13013-2,1431,217305-1,522621913
Customer lists5-7 years1,8481,2186301,2681,0751935-7 years19,438-(1,138)18,3007,9493,547(1,138)10,3587,94211,489
Covenants not to compete5 years26211914311511415 years262-(92)17018733(92)1284275
Patents5 years5031194122195 years17697-273557-62211121
$9,511$4,908$4,603$6,407$3,669$2,738$40,377$1,040$(4,231)$37,186$17,781$6,626$(4,231)$20,176$17,010$22,596

    At the beginning of fiscal 2012, the Dataradio tradename, which was originally classified as an indefinite-lived asset at the time of its acquisition in 2006, was determined to have a finite useful life as a result of management’s decision to phase out the use of this tradename in the future. Consequently, in fiscal 2012 the Company began amortizing this asset over a period of seven years.44


Amortization expense of intangible assets was $1,743,000, $1,277,000,$6,626,000, $6,590,000 and $1,132,000 for the$6,283,000 in fiscal years ended February 28, 2013, 20122016, 2015 and 2011,2014, respectively. All intangible asset amortization expense is attributable to the Wireless DataCom segment. Estimated amortization expense in future fiscal years is as follows (in thousands):

Fiscal Year     
2017$     6,689
20186,235
20192,890
2020882
2021174
Thereafter140
$17,010

NOTE 7 – OTHER ASSETS

Fiscal Year 
2014$     1,349
2015977
2016926
2017926
2018425
$4,603

Other assets consist of the following (in thousands):

February 28,
     2016     2015
Investment in LoJack common stock$     5,466$     -
Deferred compensation plan assets3,3702,222
Equity investment in U.K. affiliate1,167-
Other637915
$10,640$3,137

In November and December 2015, prior to entering into a definitive agreement to acquire LoJack, CalAmp purchased 850,100 shares of LoJack common stock in the open market. These shares, which were purchased at an average cost of $4.76, were valued at $6.43 per share at the end of fiscal 2016, which was the closing price of LoJack’s common stock on February 28, 2016. The revaluation of these shares to fair value resulted in gain of $1.4 million that is included in Investment Income in the consolidated statement of comprehensive income.

The Company established a non-qualified deferred compensation plan in August 2013 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 a date specified by the participant in accordance with the plan. The Company is informally funding the deferred compensation plan obligations by making cash deposits to a Rabbi Trust that are invested in various equity, bond and money market mutual funds in generally the same proportion as investment elections made by the participants for their compensation deferrals. The deferred compensation plan liability is included in Other Non-current Liabilities in the accompanying consolidated balance sheets.

In September 2015, the Company invested £1,400,000 or approximately $2,156,000 for a 49% minority ownership interest in Smart Driver Club Limited, a technology and insurance startup company located in the United Kingdom. This investment is accounted for under the equity method since the Company has significant influence over the investee. The Company’s equity in the net loss of this affiliate amounted to $829,000 in fiscal 2016. The foreign currency translation adjustment for this equity investment amounted to $161,000 as of February 28, 2016 and is included as a component of other comprehensive income.

NOTE 68 – FINANCING ARRANGEMENTS AND CONTRACTUAL CASH OBLIGATIONS

Subordinated Promissory NotesBank Credit Facility

    On December 22, 2009 and January 15, 2010, theThe Company raised an aggregate amount of $5,000,000 from the issuance of subordinated promissory notes (the "Subordinated Notes") that bore interest at 12% per annum and hadhas a maturity date of December 22, 2012. On August 15, 2011, in conjunction with entering into the Fourth Amendmentcredit facility with Square 1 Bank the Company paid in full the $5,000,000 outstanding principal balance of the Subordinated Notes plus accrued interest of approximately $76,000, which included Subordinated Notes totaling $325,000 that were held by two officers and one director of the Company.

Bank Credit Facility

    On March 1, 2013, CalAmp Corp. (the “Company” or “CalAmp”) and Square 1 Bank entered into the Eighth Amendment (the “Eighth Amendment”) to the Loan and Security Agreement dated as of December 22, 2009 (as amended by the Eighth Amendment, the “Amended Loan Agreement”). The Eighth Amendment increased the maximum credit limit of the facility from $12 millionprovides for borrowings up to $15 million lowered the interest rate on outstanding borrowings from prime plus 1.0% to prime, and extended the facility maturity date from August 15, 2014 to March 1, 2017. The Eighth Amendment provided for a new $5 million term loan (the “New Term Loan”) that was fully funded on March 4, 2013, which was just after the end of fiscal 2013. Concurrent with funding the New Term Loan, the pre-existing term loan with an outstanding principal balance of $1.8 million was retired. Principal of the New Term Loan is repayable at the rate of $83,333 per month beginning April 2013, with a $1.1 million principal payment due at maturity. The revolver portion of the Amended Loan Agreement has a borrowing limit equal to the lesser of (a) $15 million minus the term loan principal outstanding at any point in time, or (b) 85% of eligible accounts receivable.receivable, whichever is less. The credit facility expires on March 1, 2017. Borrowings under this line of credit bear interest at the bank’s prime rate. There were no borrowings outstanding on the revolverunder this credit facility at the end of fiscal 2013February 28, 2016 or 2012. Interest is payable on the last day of each calendar month. The Company agreed to pay loan fees to Square 1 Bank in connection with the Eighth Amendment of $7,500 on the first anniversary and $37,500 on each of the next three anniversaries of the New Term Loan. 2015.

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The Amended Loan Agreementbank credit facility contains financial covenants that require the Company to maintain a minimum level of earnings before interest, income taxes, depreciation, amortization and other noncash charges ("EBITDA")(EBITDA) and a minimum debt coverage ratio, both measured monthly beginning March 2013 on a rolling 12-month basis. At and subsequent to February 28, 2013,2016, the Company was in compliance with its debt covenants under the credit facility. The credit facility also provides for a number of customary events of default, including a provision that a material adverse change constitutes an event of default that permits the lender, at its option, to accelerate the loan. Among other provisions, the credit facility requires a lock-box and cash collateral account whereby cash remittances from the Company's customers are directed to the cash collateral account and which amounts are applied to reduce, if applicable, the outstanding revolving loan principal. Borrowings, if any, under the bank credit facility are secured by substantially all of the assets of the Company and its domestic subsidiaries.

Debt1.625% Convertible Senior Unsecured Notes

Long-Term Debt

    Long-term debt is comprisedIn May 2015, the Company issued $172.5 million aggregate principal amount of 1.625% convertible senior unsecured notes (the “Notes”) through a private placement. The Company sold the Notes under a purchase agreement dated April 30, 2015 to J.P. Morgan Securities LLC and Jefferies LLC as representatives of the following (in thousands):

     February 28,February 28,
     2013     2012
Bank term loan$          1,800$          3,000
 Note payable to Navman 2,895-
4,695 3,000
Less portion due within one year(2,261)(1,100)
Long-term debt$2,434$1,900

several initial purchasers. The NavmanNotes were issued under an indenture dated May 6, 2015 (the “Indenture”) between CalAmp and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).

The net proceeds from the sale of the Notes were approximately $167.2 million, net of issuance costs of $5.3 million. The Company used $15.4 million of the net proceeds from this offering to pay the cost of purchased convertible note ishedges that was partially offset by the proceeds from the separate sale of warrants, as described below under “Note Hedge and Warrant Arrangements.” The Company has used, and expects to continue to use, the remaining net proceeds from the issuance of the Notes for general corporate purposes including, but not limited to, acquisitions or other strategic transactions and working capital.

Under the Indenture, the Notes bear interest at a rate of 1.625% per year payable in cash on May 15 and November 15 of each year beginning on November 15, 2015. The Notes will mature on May 15, 2020 unless earlier converted or repurchased. The Company may not redeem the formNotes prior to their stated maturity date. The Notes rank senior in right of a 15% rebatepayment to any existing or future indebtedness which is subordinated by its terms, will rank equally in right of payment to any indebtedness that is not so subordinated, will be structurally subordinated to all indebtedness and liabilities of the Company’s subsidiaries and will be effectively junior to the secured indebtedness of the Company to the extent of the value of the assets securing such indebtedness. The 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 the Company and the Trustee, may declare 100% of the principal amount of, and accrued and unpaid interest, if any, on certain products soldall the Notes then outstanding to be due and payable immediately. Such events of default include, without limitation, the default by the Company or any of its subsidiaries with respect to Navman underindebtedness for borrowed money in excess of $10 million and the Supply Agreement. entry of judgments for the payment of $10 million or more against the Company or any of its subsidiaries which are not paid, discharged or stayed within 60 days.

The unpaid balanceNotes will be convertible into cash, shares of the Navman note would become immediately dueCompany’s common stock or a combination of cash and payableshares of common stock, at the Company’s election, based on an initial conversion rate of 36.2398 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of $27.594 per share of common stock, subject to customary adjustments. Holders may convert their Notes at their option at any time prior to November 15, 2019 upon the occurrence of certain events in the future, as defined in the Indenture. During the period from November 15, 2019 to May 13, 2020, holders may convert all or any terminationportion of their Notes regardless of the Supply Agreement byforegoing conditions. The Company’s intent is to settle the principal amount of the Notes in cash upon conversion. If the conversion value exceeds the note principal amount, the Company before the endwould deliver shares of its five-year term (other thancommon stock in respect to the remainder of its conversion obligation in excess of the aggregate principal amount (the “conversion spread”). The shares associated with the conversion spread, if any, would be included in the denominator for the computation of diluted earnings per share, with such shares calculated using the average closing price of the Company’s common stock during each period. As of February 28, 2016, none of the conditions allowing holders of the Notes to convert have been met.

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

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

Accounting guidance requires that convertible debt that can be settled for cash, such as the Notes, 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 a similar debt without the conversion feature. The difference between the principal amount of the Notes 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 result of an uncured breachdebt discount on the issuance date. The fair value of the Supply Agreement by Navman), except thatliability component of the Notes in the caseamount of such acceleration$138.9 million was determined using a discounted cash flow analysis, in which the note balance would be subordinatedprojected interest and principal payments were discounted back to the Company’s bankissuance date of the Notes at a market interest rate for nonconvertible debt pursuantof 6.2%, which represents a Level 3 fair value measurement. The remaining gross proceeds of the Notes of $33.6 million 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, with an offsetting debt discount recorded of $33.6 million. The associated deferred tax effect of $16.0 million was recorded as a reduction of additional paid-in capital. The amount recorded in additional paid-in capital is not to be remeasured as long as it continues to meet the conditions for equity classification. The debt discount of $33.6 million is being amortized to interest expense using the effective interest method with an effective interest rate of 6.2% over the period from the issuance date through the contractual maturity date of the Notes of May 15, 2020.

In accounting for the transaction costs related to the provisions of a debt subordination agreement. In the absence of an acceleration event, the Navman note is payable solely in the form of a rebate on products sold by CalAmp to Navman under the Supply Agreement. After all rebates have been applied to pay down the note balance, and assuming that an acceleration event has not occurred, any unpaid balance remaining on the Navman note would be forgiven at the later of May 7, 2017 or the final date to which the Supply Agreement is extended pursuant to a force majeure event. During the year ended February 28, 2013,Notes issuance, the Company made principal paymentsallocated the total amount incurred to the liability and equity components based on their relative fair values. Issuance costs attributable to the liability component of $4.3 million were recorded as a direct deduction from the carrying value of the Notes in accordance with ASU 2015-03 and are being amortized to expense over the aggregate amountterm of $535,000 on the note.Notes using the effective interest method. Issuance costs attributable to the equity component of $1.0 million were recorded as a charge to additional paid-in capital within stockholders’ equity. Additionally, the Company recorded a deferred tax asset of $0.4 million related to the equity component of issuance costs because such costs are deductible for tax purposes.

Other Non-Current Liabilities

    Other non-current liabilitiesBalances attributable to the Notes consist of the following (in thousands):

February 28,February 28,
     2013     2012
Deferred rent$251$279
Deferred revenue1,285724
Contingent royalties consideration payable to Navman303-
$1,839$1,003

    The contingent royalties consideration in the aggregate fair value amount of $884,000 at February 28, 2013 is payable2016 (in thousands):

Principal     $     172,500
Less: Unamortized debt discount(29,002)
          Unamortized debt issuance costs(3,698)
Net carrying amount of the Notes$139,800

The Notes are carried at their principal amount, net of unamortized debt discount and issuance costs, and are not marked to Navman at approximately 15%market each period. The approximate fair value of the revenueNotes as of February 28, 2016 was $164 million, which was estimated on the basis of inputs that are observable in the market and which is considered a Level 2 measurement method in the fair value hierarchy.

See Note 13 for information related to interest expense on the Notes.

Note Hedge and Warrant Arrangements

In connection with the sale of the Notes, the Company entered into privately negotiated note hedge transactions relating to 6.25 million shares of common stock with certain counterparties that include affiliates of some of the initial purchasers and other financial institutions (the “Hedge Counterparties”). The note hedges represent call options from the Hedge Counterparties with respect to $172.5 million aggregate principal amount of the Notes. The Company paid $31.3 million for the note hedges and as a result, $19.3 million, net of deferred tax effects, was recorded as a reduction to additional paid-in capital within stockholders’ equity.

The note hedges cover, subject to anti-dilution adjustments substantially similar to those applicable to the Notes, the 6.25 million shares of the Company’s common stock that initially underlie the Notes. The note hedges are intended generally to reduce the potential dilution to the Company’s outstanding common stock and/or reduce the amount of any cash payments the Company is required to make in excess of the principal amount of any converted Notes upon any conversion of Notes in the event that the market price per share of the Company’s common stock is greater than the strike price of the note hedges, which is initially equal to $27.594, the same as the initial conversion price for the Notes. As of February 28, 2016, the Company had not received any common stock under the note hedges.

47


Separately, the Company also entered into privately negotiated warrant transactions with the Hedge Counterparties, giving them the right to acquire the same number of shares of common stock that underlie the Notes at a strike price of $39.42 per share, also subject to adjustment, which represents a premium of 100% over the last reported sale price of the Company’s common stock of $19.71 on April 30, 2015, the date on which the Notes were priced. The warrants will be exercisable in equal installments for a period of 80 trading days beginning on August 15, 2020. The Company received a total amount of $16.0 million in cash proceeds from the sale and issuance of the warrants. As of February 28, 2016, the warrants had not been exercised and remain outstanding.

The warrants will have a dilutive effect to the extent that the market price of the Company’s common stock exceeds the applicable strike price of the warrants on any expiration date of the warrants.

The note hedges and warrants are separate transactions, entered into by CalAmpthe Company with the Hedge Counterparties and are not part of certain products acquired from Navmanthe terms of the Notes and will not affect the holders’ rights under the Asset Purchase Agreement duringNotes. In addition, holders of the first three years. DuringNotes will not have any rights with respect to the year ended February 28, 2013,note hedges or the warrants. The values ascribed to the note hedges and warrants were initially recorded to and continue to be classified as additional paid-in capital within stockholders’ equity. The Company made royalty paymentsis required, for the remaining term of $24,000the Notes, to Navman.assess whether the note hedges and warrants continue to meet the stockholders’ equity classification requirements. If in any future period these derivative instruments fail to satisfy those requirements, they would need to be reclassified out of stockholders’ equity, to either assets or liabilities depending on their nature, and be recorded at fair value with subsequent changes in their fair value reflected in earnings.



The Company elected to integrate the call options with the Notes for federal income tax purposes pursuant to applicable U.S. Treasury Regulations. Accordingly, the $31.3 million cost of the note hedges will be deductible for income tax purposes as original issue discount interest over the term of the Notes. The Company recorded a deferred tax asset of $12.0 million which represents the tax benefit of these tax deductions with an offsetting entry to additional paid-in capital.

Contractual Cash Obligations

Following is a summary of the Company's contractual cash obligations as of February 28, 20132016 (in thousands):

Future Cash Payments Due by Fiscal Year  Future Estimated Cash Payments Due by Fiscal Year
     2017     2018     2019     2020     2021     Total
Contractual Obligations     2014     2015     2016     2017     2018     Thereafter     Total
Bank term loan$     917$     883$     -$     -$     -$-$     1,800
Note payable to Navman1,407901901256--$3,465
Convertible senior notes principal$     -$     -$     -$     -$     172,500$     172,500
Convertible senior notes stated interest2,8032,8032,8032,8031,40212,614
Operating leases1,08790284934658-3,2422,2371,8671,4988191296,550
Purchase obligations32,853-----32,85339,768----39,768
Other contractual commitments3,470----3,470
Total contractual obligations$36,264$2,686$1,750$602$58$-$41,360$48,278$4,670$4,301$3,622$174,031$234,902

Purchase obligations consist primarily of inventory purchase commitments. Rent expense under operating leases was $1,707,000, $1,566,000$2,179,000, $2,146,000 and $1,918,000$1,886,000 in fiscal years 2013, 20122016, 2015 and 2011,2014, respectively.

48


NOTE 79 – INCOME TAXES

The Company's income (loss) before income taxes and equity in net loss of affiliate consists of the following (in thousands):

Year Ended February 28,Year Ended February 28,
     2013     2012     2011     2016     2015     2014
Domestic$     14,811$     6,047$     (3,314)$     22,461$     24,684$     17,185
Foreign637(768)(141)(120)116726
Income (loss) before income taxes$15,448$5,279$(3,455)
Total income before income taxes and equity in net loss of affiliate$22,341$24,800$17,911

The income tax benefit (provision)provision consists of the following (in thousands):

 Year Ended February 28,Year Ended February 28,
     2013     2012     2011     2016     2015     2014
Current:
Federal$     -$     (52)$     -$     (182)$     -$     -
State(9)(9)-(208)(325)(42)
Foreign(44)-172(60)(49)(45)
Total current(53)(61)172(450)(374)(87)
Deferred:
Federal21,465--(4,331)(8,134)(6,346)
State7,766--209216325
Total deferred29,231--(4,122)(7,918)(6,021)
Income tax benefit (provision)$29,178$(61)$172
Total income tax provision$(4,572)$(8,292)$(6,108)

Differences between the income tax benefit (provision)provision reported in the consolidated statements of operationscomprehensive income and the income tax amount computed using the statutory U.S. federal income tax rate are as follows (in thousands):

Year Ended February 28,Year Ended February 28,
     2013     2012     2011     2016     2015     2014
Income tax benefit (provision) at U.S. statutory federal rate of 35%$     (5,407)$     (1,848)$     1,209
State income tax benefit (provision), net of federal income tax effect(570)(245)108
Income tax provision at U.S. statutory federal rate of 35%$     (7,819)$     (8,680)$     (6,269)
State income tax provision, net of federal income tax effect(833)(867)(770)
Foreign taxes178(268)123(102)41209
Valuation allowance reductions (increases)35,1481,816(1,652)2,541250(865)
Research and development tax credits1,0081,5561,126
Other, net(171)484384633(592)461
Income tax benefit (provision)$29,178$(61)$172
Total income tax provision$(4,572)$(8,292)$(6,108)

49


The components of net deferred income tax assets for U.S. income tax purposes are as follows (in thousands):

February 28,February 28,
     2013     2012     2016     2015
Net operating loss carryforwards$     22,977$     28,214$       10,660$       20,318
Depreciation, amortization and impairments9,58511,1231,5981,785
Research and development credits6,0895,3449,7478,738
Stock-based compensation1,9902,1222,3831,869
Capital loss carryforward831848
Other tax credits6361,028917635
Inventory reserve534761502484
Warranty reserve515393752697
Payroll and employee benefit accruals4694082,4211,797
Allowance for doubtful accounts179101241258
Other accrued liabilities 2,694 2,158 
Other, net1,170549(84)242
Gross deferred tax assets44,97550,89131,83138,981
Valuation allowance(3,959)(39,054)(1,618)(4,159)
Net deferred tax assets41,01611,837 $30,213$34,822
Less current portion6,4005,425
Non-current portion$34,616$6,412

    TheDuring fiscal 2016, the Company also hasreduced the deferred tax assets for Canadian income tax purposes amounting to $4.3 million at February 28, 2013 which relate primarily to research and development expenditures pool and non-capital loss carryforwards. The Company has provided a 100% valuation allowance against these Canadianby $2.5 million based on its assessment of the future realizability of the deferred tax assets.

    During fiscal 2013, the Company reversed a portion of its deferred tax asset This valuation allowance correspondingreduction relates to the amount of NOLs utilized to offset taxable income. In addition, pursuant to the fiscal 2013 evaluation of the future utilizability of deferred tax assets, the Company reversed substantially all of the remaining valuation allowance at the end of fiscal 2013, resulting in an income tax benefit of $29.2 million for the year and a net deferred tax assets balance of $41.0 million at year-end. The Company believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the net deferred tax assets.

    At February 28, 2013, the Company hadstate net operating loss carryforwards ("NOLs"(“NOLs”) and federal research and development (“R&D”) tax credits that are projected to be used before their expiration dates.

At February 28, 2016, the Company had NOLs of approximately $64.9$53 million and $81.7$65 million for federal and state purposes, respectively, expiring at various dates through fiscal 2033. If certain substantial changes in the Company’s ownership were to occur, there could be an annual limitation on the amount of the NOL carryforwards that can be utilized.

    In 2008, the State of California adopted legislation that suspended the use of NOLs for tax years beginning on or after January 1, 2008 and 2009. In 2010, the suspension was extended two years through the end of 2011. Under current California law the use of NOLs was reinstated for tax years beginning on or after January 1, 2012.

As of February 28, 2013,2016, the Company had a foreign tax credit carryforward of $0.2 million expiring in fiscal 2014 and research and development (“R&D”)&D tax credit carryforwards of $4.6$6.7 million and $3.9$6.3 million for federal and state income tax purposes, respectively. The federal R&D tax credits expire at various dates through 2033.2036. A substantial portion of the state R&D tax credits have no expiration date.



    In 2007,As described further in Note 10, the Company adoptedhas tax deductions on exercised stock options and vested restricted stock awards that exceed stock compensation expense amounts recognized for financial reporting purposes. These excess tax deductions, which amounted to $4.5 million, $6.5 million and $12.8 million in fiscal years 2016, 2015 and 2014, respectively, reduce current taxable income and thereby prolong the tax shelter period of the NOL and R&D tax credit carryforwards referred to above.

The Company follows FASB ASC Topic 740, “Income Taxes,” which clarifies the accounting for income taxes by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. Management determined based on its evaluation of the Company’s income tax positions that it has one uncertain tax position relating to federal research and development (“R&D”)&D tax credits of $1.1$1.0 million at February 28, 20132016 for which the Company has not yet recognized an income tax benefit for financial reporting purposes.

    A reconciliation of50


Activity in the beginning and ending amount of unrecognized tax benefits for uncertain tax positions during the past three years is as follows (in thousands):

Balance at February 28, 2010     $     1,265
Decrease in fiscal 2011 -
Balance at February 28, 2011 1,265
Decrease in fiscal 2012(174)
Balance at February 28, 20121,091
Decrease in fiscal 2013(2)
Balance at February 28, 2013$1,089
Balance at February 28, 2013     $       1,089
Decrease in fiscal 2014 (60)
Balance at February 28, 20141,029
Change in fiscal 2015 -
Balance at February 28, 20151,029
Change in fiscal 2016-
Balance at February 28, 2016$1,029

The Company files income tax returns in the U.S. federal jurisdiction, various U.S. states, Canada, United Kingdom and New Zealand. Income tax returns filed for fiscal years 2008year 2011 and earlier are not subject to examination by U.S. federal and state tax authorities. Certain income tax returns for fiscal years 20092012 through 20132016 remain open to examination by U.SU.S. federal and state tax authorities. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods in which net operating losses or tax credits were generated and carried forward, and to make adjustments up to the net operating loss or tax credit carryforward amount. Income tax returns for fiscal years 20102012 through 20132016 remain open to examination by tax authorities in Canada.

The Company believes that italso has made adequate provisiondeferred tax assets for allCanadian income tax uncertainties pertainingpurposes amounting to $3.1 million at February 28, 2016 which relate primarily to research and development expenses and non-capital loss carryforwards. The Company has provided a 100% valuation allowance against these openCanadian deferred tax years.assets.

NOTE 810 – STOCKHOLDERS' EQUITY

Sale of Common Stock

    In February 2013, the Company raised cash of $44.8 million, net of underwriter discount and offering costs, from a public offering of 5,175,000 shares of its common stock.

Equity Awards

Under the Company's 2004 Incentive Stock Plan (the "2004 Plan")2004 Plan), which was adopted on July 30, 2004 and was amended effective July 30, 2009 and July 29, 2014, various types of equity awards can be made, including stock options, stock appreciation rights, restricted stock, performance stock units (PSUs), restricted stock units (RSUs), phantom stock and bonus stock. To date, stock options, restricted stock, PSUs, RSUs and bonus stock have been granted under the 2004 Plan. Options are generally granted with exercise prices equal to market value on the date of grant. Substantially allAll option grants expire 10 years after the date of grant.

Equity awards to officers and other employees become exercisable on a vesting schedule established by the Compensation Committee of the Board of Directors at the time of grant, generally over a four-year period. The Company treats an equity award with multiple vesting tranches as a single award for expense attribution purposes and recognizes compensation cost on a straight-line basis over the requisite service period of the entire award.



    The following table summarizes stock option activity for fiscal years 2013, 2012 and 2011 (options in thousands):

Weighted
Number ofAverage
     Options     Exercise Price
Outstanding at February 28, 2010          2,023$5.82
 
Granted1862.34
Exercised--
Forfeited or expired(101)19.23
Outstanding at February 28, 20112,1084.87
 
Granted1633.42
Exercised(16)1.68
Forfeited or expired(92)4.98
Outstanding at February 28, 20122,1634.78
 
Granted847.01
Exercised(466)2.78
Forfeited or expired(125)3.90
Outstanding at February 28, 20131,656$5.53
 
Exercisable at February 28, 20131,377$5.82

    In July 2012, upon the net share settlement exercise of 168,000 options held by a former executive officer of the Company, the Company retained 93,691 shares to cover the option exercise price and minimum required statutory amount of withholding taxes.

    Changes in the Company's outstanding restricted stock shares and RSUs during fiscal years 2013, 2012 and 2011 were as follows (shares and RSUs in thousands):

Weighted
Number ofAverage Grant
SharesDate Fair
     and RSUs     Value
Outstanding at February 28, 2010          1,784$2.06
 
Granted8632.34
Vested(544)2.15
Forfeited(58)1.78
Outstanding at February 28, 20112,0452.16
 
Granted7623.59
Vested(819)2.21
Forfeited(59)1.99
Outstanding at February 28, 20121,9292.71
 
Granted4407.50
Vested(916)2.53
Forfeited(115)2.85
Outstanding at February 28, 20131,338$4.40

    The Company retained 308,998, 279,764 and 169,854 shares of the vested restricted stock and RSUs to cover the minimum required statutory amount of withholding taxes in fiscal 2013, 2012 and 2011, respectively.

    As of February 28, 2013, there were 738,479 award units in the 2004 Plan that were available for grant.

Under the 2004 Plan, on the day of the annual stockholders meeting each non-employee director receives an equity award of up to 20,000 award units. EquityAnnual equity awards granted to non-employee directors vest on the date of the next annual stockholders meeting or one year from the date of grant, whichever is earlier. In addition, under the Company’s current director compensation program, new non-employee directors receive a restricted stock award that vests in full on the third anniversary of the grant date with a grant date fair value equal to the fair value of the most recent annual equity award made to other non-employee directors, as well as a prorated annual equity award that vests 12 months from the grant date.

51



The following table summarizes stock option activity for fiscal years 2016, 2015 and 2014 (options in thousands):

Weighted
Number ofAverage
     Options     Exercise Price
Outstanding at February 28, 2013          1,656$5.53
 
Granted5615.14
Exercised(611)7.28
Forfeited or expired(8)4.53
Outstanding at February 28, 20141,0935.04
 
Granted6117.47
Exercised(143)5.01
Forfeited or expired(4) 6.88
Outstanding at February 28, 20151,0075.80
 
Granted8217.54
Exercised (228)5.62
Forfeited or expired(1)1.80
Outstanding at February 28, 2016860$6.96
 
Exercisable at February 28, 2016688$4.66

The weighted average fair value for stock options granted in fiscal years 2016, 2015 and 2014 was $9.39, $11.02 and $9.43, respectively. The fair value of options at the grant date was determined using the Black-Scholes option pricing model with the following assumptions:

Year Ended February 28,Year Ended February 28,
Black-Scholes Valuation Assumptions      2013     2012     2011      2016     2015     2014
Expected life (years) (1)Expected life (years) (1)666Expected life (years) (1) 666
Expected volatility (2)Expected volatility (2)63%73% 74%Expected volatility (2)56% 70%69%
Risk-free interest rates (3)Risk-free interest rates (3) 0.8% 1.9%2.1%Risk-free interest rates (3)    1.8%    1.9%     1.7%
Expected dividend yieldExpected dividend yield0%0%0%Expected dividend yield0%0%0%

(1)The expected life of stock options is estimated based on historical experience.
(2)The expected volatility is estimated based on historical volatility of the Company's stock price.
(3)Based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of the stock options.

    The weighted average fair value for stock options granted in fiscal years 2013, 2012 and 2011 was $4.41, $2.22, and $1.54, respectively.

The weighted average remaining contractual term and the aggregate intrinsic value of outstanding options as of February 28, 20132016 was 4.94.7 years and $9.6$9.7 million, respectively. The weighted average remaining contractual term and the aggregate intrinsic value of exercisable options as of February 28, 20132016 was 4.23.7 years and $7.7$9.4 million, respectively.

During fiscal 2014, upon the net share settlement exercise of 62,899 options held by four directors of the Company, the Company retained 37,417 shares to cover the aggregate option exercise price.

52


Changes in the Company's outstanding restricted stock shares, PSUs and RSUs during fiscal years 2016, 2015 and 2014 were as follows (shares, PSUs and RSUs in thousands):

Number of
RestrictedWeighted
Shares,Average Grant
PSUs andDate Fair
     RSUs     Value
Outstanding at February 28, 2013           1,338$4.40
 
Granted31215.58
Vested (592) 3.83
Forfeited(34)7.88
Outstanding at February 28, 20141,0248.02
 
Granted36517.92
Vested(471)6.28
Forfeited(32)11.69
Outstanding at February 28, 201588612.90
 
Granted51717.75
Vested(407)9.97
Forfeited(43)15.55
Outstanding at February 28, 2016953$16.66

The Company retained 147,335 shares, 175,176 shares and 203,383 shares of the vested restricted stock and RSUs to cover the minimum required statutory amount of withholding taxes in fiscal years 2016, 2015 and 2014, respectively.

Stock-based compensation expense for theduring fiscal years ended February 28, 2013, 20122016, 2015 and 20112014 is included in the following captions of the consolidated statements of operationscomprehensive income (in thousands):

Year Ended February 28,Year Ended February 28,
     2013     2012     2011     2016     2015     2014
Cost of revenues$     136$     100$     151$       229$       241$       191
Research and development450388339 781613 516
Selling2522042091,208 591360
General and administrative2,0721,6831,410 3,636 2,6551,857
$2,910$2,375$2,109$5,854$4,100$2,924

As of February 28, 2013,2016, there was $5.1$13.4 million of total unrecognized stock-based compensation cost related to nonvested equity awards. That cost is expected to be recognized over a weighted-average remaining vesting period of 2.7 years.

As of February 28, 2016, there were 2,025,714 award units in the 2004 Plan that were available for grant.

Tax Benefits from Exercise of Stock Options and Vesting of Restricted Stock and RSU Awards

Total cash received as a result of option exercises was $1,283,000, $718,000 and $3,928,000 in fiscal 2013 was $912,000.years 2016, 2015 and 2014, respectively. The aggregate fair value of options exercised and vested restricted stock-basedstock and RSU awards as of the exercise date or vesting date was $8,795,000$9,078,000, $9,900,000 and $17,532,000 for fiscal 2013.years 2016, 2015 and 2014, respectively. In connection with these option exercises and vested restricted stock-basedstock and RSU awards, the excess stock compensation tax benefitsdeductions were $2,217,000$4,531,000, $6,515,000 and $12,781,000 for fiscal 2013.years 2016, 2015 and 2014, respectively. The Company hadhas elected a policy of applying the “with-and-without” approach to determine the realized tax benefits.benefits for financial reporting purposes. Under this policy, none of the current year excess deductions would have beenare deemed to reduce regular taxes payable because the Company’s NOL carryforwards would beare deemed to reduce taxes payable prior to the utilization of any excess tax deductions from the exercise of stock options and vesting of restricted stock-basedstock and RSU awards. The excess tax benefitsdeductions when realized by the Company for financial reporting purposes under the with-and-without approach will be recorded as an increase in additional paid-in capital in the consolidated balance sheet and will be classified as cash flows from financing activities rather than cash flows from operating activities in the consolidated cash flow statement. The cumulative amount of unrecognized excess tax benefits for all years through the end of fiscal 2013 were $2,786,000.

Stock Warrants

    In fiscal 2010, the Company issued a total of 500,000 common stock purchase warrants to the Subordinated Note holders at an exercise price of $4.02 per share, which represented a 20% premium to the average closing price of the Company's common stock for the 20 consecutive trading days prior to December 22, 2009. These warrants were exercisable until December 22, 2012. During fiscal 2013, the Company received cash of $1,879,000 from the exercise of 467,500 common stock purchase warrants that were held by non-affiliates of the Company. In addition, the Company retained 15,850 shares to pay for the exercise price of 32,500 warrants held directly or beneficially by two officers and one director of the Company that were exercised on a net share settlement basis.53



    In October 2009, the Company issued 20,000 common stock purchase warrants to a key supplier at an exercise price of $1.00 per share. These warrants became vested in April 2010 and were exercised during fiscal 2013.

NOTE 911 – EARNINGS PER SHARE

    FollowingEarnings per share is a summarycomputed using the two-class method. The two-class method determines earnings per share for each class of common stock and participating securities according to their respective participation rights in undistributed earnings. The Company’s unvested restricted stock awards which contain nonforfeitable rights to dividends are considered participating securities. Basic earnings per share is computed by dividing net income for the calculation ofperiod by the weighted average number of common shares used inoutstanding during the period. Diluted earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period, plus the dilutive effect of outstanding stock options and restricted stock-based awards using the treasury stock method. The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands)thousands, except per share amounts):

Year Ended February 28,Year Ended February 28,
     2016     2015     2014
Net income$     16,940$     16,508$     11,803
     2013     2012     2011
Basic weighted average number of common
shares outstanding 28,88627,65827,18136,44835,78434,969
Effect of stock options, restricted stock,
RSUs and warrants computed on    
treasury stock method1,096800-
Effect of stock options and restricted stock units 
computed on treasury stock method5027461,054
Diluted weighted average number of common 
shares outstanding       29,982       28,458       27,18136,95036,53036,023
Earnings per share:
Basic$0.46$0.46$0.34
Diluted$0.46$0.45$0.33

Shares underlyingsubject to anti-dilutive stock options amounting to 322,000and restricted stock-based awards of 199,000, 159,000 and 57,000 at February 28, 20132016, 2015 and 2014, respectively, were excluded from the calculations of diluted earnings per share for the years then ended.

The Company has the option to pay cash, issue shares of common stock or any combination thereof for the aggregate amount due upon conversion of the Notes. The Company’s intent is to settle the principal amount of the Notes in cash upon conversion. As a result, only the shares issuable for the conversion value, if any, in excess of the principal amounts of the Notes would be included in diluted earnings per share. During fiscal 2013 because based on2016 from the exercise pricestime of these derivative securities their inclusion wouldthe issuance of Notes, the average market price of the Company’s common stock was less than the $27.594 initial conversion price of the Notes, and consequently no shares have been anti-dilutive under the treasury stock method.

    Shares underlying stock options and warrants amounting to 907,000 at February 28, 2012 were excluded from the calculations ofincluded in diluted earnings per share for fiscal 2012 because based on the exercise pricesconversion value of the Notes.

NOTE 12 – EMPLOYEE RETIREMENT PLANS

The Company maintains a 401(k) employee savings plan in the U.S. and a similar retirement savings plan in New Zealand in which all employees of these derivative securities their inclusion would have been anti-dilutive underrespective countries are eligible to participate. The Company may make matching contributions to the treasury stock method.savings plans as authorized by the Board of Directors. The matching contribution in the U.S. savings plan is currently equal to a 100% match of the first 3% of participants’ compensation contributed to the plans plus a 50% match of the next 2% contributed by the participants. The New Zealand savings plan provides for matching contributions equal to the first 3% of participants’ compensation contributed to the plan. The Company recorded expense for the matching contributions of $1,169,000, $1,059,000 and $733,000 in fiscal years 2016, 2015 and 2014, respectively.

    Shares underlying stock awards and warrants amounting to 4,673,000 at February 28, 2011 were excluded from the computation of diluted earnings per share for fiscal 2011 because the Company reported a net loss during that year and hence the effect of inclusion would have been anti-dilutive (i.e., including such securities would have resulted in a lower loss per share).54


NOTE 1013 – OTHER FINANCIAL INFORMATION

Supplemental Balance Sheet Information

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

February 28,
     2016     2015
Deferred compensation plan liability$       3,392$       2,246
Deferred revenue 1,0701,652
Deferred rent 559329
Acquisition-related contingent consideration530  -
$5,551$4,227

See Note 7 for information related to non-qualified deferred compensation plan.

The acquisition-related contingent consideration at February 28, 2016 is comprised of the estimated earn-out of $530,000 payable to the sellers in conjunction with the April 2015 acquisition of Crashboxx. See Note 2 for additional information related to this acquisition.

Supplemental Income Statement Information

Investment income consists of the following (in thousands):

Year Ended February 28,
     2016     2015     2014
Investment income on cash equivalents and marketable securities$       814$       58$       42
Investment income (loss) on Rabbi Trust assets  (359)166 -
Unrealized gain on investment in LoJack common stock1,416  --
Total investment income$1,871$224$42

Interest expense consists of the following (in thousands):

Year Ended February 28,
     2016     2015     2014
Interest expense on convertible senior unsecured notes: 
       Stated interest at 1.625% per annum $       2,268 $       -$       -
       Amortization of note discount4,613--
       Amortization of debt issue costs588--
 7,469- -
Other interest expense126296407
Total interest expense$7,595$296$407

55


Supplemental Cash Flow Information

    "Net“Net cash provided (used) by operating activities"activities” in the consolidated statements of cash flows includes cash payments for interest expense and income taxes as follows (in thousands):

Year Ended February 28,Year Ended February 28,
     2013     2012     2011     2016     2015     2014
Interest expense paid $127 $756 $1,076 $       1,512 $       12 $       117
Income tax paid (net refunds received)$         156$         (64)$         (803)
Income tax paid$451$347$35

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

Year Ended
February 28,
     2013     2012
Acquisition of Navman Wireless product lines on May 7, 2012: 
       Non-interest bearing $4,000 promissory note issued
              to Navman Wireless, less discount of $920$       3,080 $              -
 
       Accrued liability for earn-out consideration payable
              to Navman Wireless$822$-
Year Ended February 28,
     2016     2015     2014
Acquisition of Crashboxx in April 2015:     
       Accrued liability for earn-out consideration$       455$       -$       -

Valuation and Qualifying Accounts

Following is the Company's schedule of valuation and qualifying accounts for the last three years (in thousands):

Charged
Balance at(credited)Balance at
beginningto costs andend of
     of period     expenses     Deductions     period
Allowance for doubtful accounts:
       Fiscal 2011 $413$386$(509) $290
       Fiscal 2012$290$114  $(150)$254
       Fiscal 2013$254$241$(34)$461
 
Warranty reserve:
       Fiscal 2011$1,231$647$(1,178)$700
       Fiscal 2012$700$635$(341)$994
       Fiscal 2013$994$910$(576)$1,328
 
Deferred tax assets valuation allowance:
       Fiscal 2011$41,297$1,652$(1,767)$41,182
       Fiscal 2012$41,182 $1,816$       (3,944)$       39,054
       Fiscal 2013$       39,054$       (35,095)$-$3,959
Charged
Balance at(credited)
beginningto costs andBalance at
     of year     expenses     Deductions     end of year
Allowance for doubtful accounts:
       Fiscal 2014$461 $353 $(53)$761
       Fiscal 2015 761188 (276) 673
       Fiscal 2016673170(221)622
 
Warranty reserve:
       Fiscal 2014$1,328$881$(693)$1,516
       Fiscal 20151,5161,333(1,030)1,819
       Fiscal 20161,8191,015(942)1,892
 
Deferred tax assets valuation allowance:
       Fiscal 2014$3,959$890$-$4,849
       Fiscal 20154,849150(840)4,159
       Fiscal 20164,159-(2,541)1,618

The warranty reserve is included in the Other Current Liabilities in the consolidated balance sheets.

56


NOTE 1114 – COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

The Company leases a building in Oxnard, California that houses its corporate office and U.S. manufacturing facilities under an operating lease that expires on June 30, 2016. The lease agreement requires the Company to pay all maintenance, property taxes and insurance premiums associated with the building. In addition, the Company leases other facilities in California, Minnesota, Georgia, CanadaVirginia and New Zealand. The Company also leases certain manufacturing equipment and office equipment under operating lease arrangements. A summary of future payments of operating lease commitments is included in the contractual cash obligations table in Note 6.8.

Supplier Guarantee

    The Company has guaranteed the debt of a supplier to a third party. The Company has recourse against the supplier in the event that the Company is required to make a payment to the third party under the guaranty.

45


NOTE 1215 – LEGAL PROCEEDINGS

    FromIn December 2013, a patent infringement lawsuit was filed against the Company by Omega Patents, LLC, (Omega), a non-practicing entity, also known as a patent-assertion entity. Omega alleged that certain of the Company’s vehicle tracking products infringed on certain patents asserted by Omega. On February 24, 2016, a jury in the U.S. District Court for the Middle District of Florida awarded Omega damages of $2.9 million, for which CalAmp recorded a full accrual for this liability in the fiscal 2016 fourth quarter. Following trial, Omega made a motion seeking enhanced damages and requesting the court to exercise its discretion to treble damages and assess attorney’s fees. The Company’s responsive motion is pending, and the judge’s ruling has not yet been rendered. CalAmp intends to pursue an appeal at the Court of Appeals for the Federal Circuit. In addition to its appeal, CalAmp is seeking to invalidate a number of Omega’s patents in actions filed with the U.S. Patent and Trademark Office. Notwithstanding the adverse jury verdict, the Company continues to believe that its products do not infringe Omega’s patents and that it will prevail on appeal. While it is not feasible to predict with certainty the outcome of this litigation, its ultimate resolution could be material to cash flows and results of operations. Furthermore, if an injunction is issued by the court, we could be prevented from manufacturing and selling a number of our products, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

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

NOTE 1316 – SEGMENT AND GEOGRAPHIC DATA

The Company’s business activities are organized into its Wireless DataCom and Satellite business segments. The segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the chief executive officer in determining how to allocate resources and evaluate performance. The segments are determined based on several factors, including homogeneity of products, technology, delivery channels and similar economic characteristics. Information about each segment’s business and the products and services that generate each segment’s revenue is described in Note 1, Description of Business and Summary of Significant Accounting Policies.

Information by business segment is as follows (in thousands, except percentages):

Year ended February 28, 2013Year ended February 28, 2012
Operating SegmentsOperating Segments
WirelessCorporateWirelessCorporate
     DataCom     Satellite     Expenses     Total     DataCom     Satellite     Expenses     Total
Revenues$     139,503 $     41,076$     180,579$     99,121$     39,607$     138,728
Gross profit$50,005 $6,888    $56,893$38,632  $3,387    $42,019 
Gross margin 35.8%16.8%  31.5%  39.0% 8.6%  30.3%
Operating income (loss)$16,844$3,111$     (3,975)$15,980$11,564$(292)$     (3,902)$7,370

Year ended February 28, 2011Year ended February 28, 2016Year ended February 28, 2015
Operating SegmentsOperating SegmentsOperating Segments
WirelessCorporateWirelessCorporateWirelessCorporate
     DataCom     Satellite     Expenses     Total   DataCom   Satellite   Expenses   Total   DataCom   Satellite   Expenses   Total
Revenues$78,434 $35,899 $114,333$  241,387$  39,332$  280,719$  213,119$  37,487 $  250,606
Gross profit $27,922 $1,636  $29,558$91,976$10,983$102,959$77,899$9,505$87,404
Gross margin35.6%4.6%  25.9%38.1%27.9%36.7%36.6%25.4%34.9%
Operating income (loss)$       4,218$       (2,903)$       (3,375)$       (2,060)
Operating income$28,148$6,417$     (6,480)$28,085$23,833$5,017$     (3,910)$24,940

57


Year ended February 28, 2014
Operating Segments
WirelessCorporate
     DataCom     Satellite     Expenses     Total
Revenues$       187,012 $       48,891 $       235,903
Gross profit $70,114$9,817  $79,931
Gross margin 37.5%20.1%   33.9%
Operating income$16,324$5,642$       (3,623)$18,343

The Company considers operating income to be thea primary measure of operating performance of its business segments. The amount shown for each period in the "Corporate Expenses"“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 executive officerscorporate staff and expenses such as audit fees, investor relations, stock listing fees, director and officer liability insurance, and director fees and expenses.

It is not practicable for the Company to report identifiable assets by segment because these businesses share resources, functions and facilities. The Company does not have significant long-lived assets outside the United States.

The Company'sCompany’s revenues were derived mainly from customers in the United States, which represented 82%83%, 89%79% and 91%81% of consolidated revenues in fiscal 2013, 2012years 2016, 2015 and 2011,2014, respectively. No single foreign country accounted for more than 5%6% of the Company'sCompany’s revenue in fiscal 2013, 2012years 2016, 2015 or 2011.

46


NOTE 14 – EMPLOYEE SAVINGS PLAN

    The Company maintains a 401(k) Employee Savings Plan in the U.S. and retirement savings plans in Canada and New Zealand in which all employees of these respective countries are eligible to participate. The Company may make matching contributions to the savings plans as authorized by the Board of Directors. The Company reinstated the matching contributions to the U.S. and Canadian savings plans effective at the beginning of calendar 2011 equal to one-half of the first 4% of participants’ compensation contributed to the plans. The New Zealand savings plan provides for matching contributions equal to the first 2% of participants’ compensation contributed to the plan. The Company recorded expense for the matching contributions of $355,000, $312,000 and $58,000 in fiscal years 2013, 2012 and 2011, respectively.2014.

NOTE 1517 – QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following summarizes certain quarterly statement of operations data for each of the quarters in fiscal 2013years 2016 and 20122015 (in thousands, except percentages and per share data):. The operating results in any quarter are not necessarily indicative of the results that may be expected for any future period. The Company derived this data from the unaudited consolidated interim financial statements that, in the Company’s opinion, have been prepared on substantially the same basis as the audited financial statements contained elsewhere in this report and include all normal recurring adjustments necessary for a fair presentation of the financial information for the periods presented. These unaudited quarterly results should be read in conjunction with the financial statements and notes thereto included elsewhere in this report.

Fiscal 2013Fiscal 2016
FirstSecondThirdFourthFirstSecondThirdFourth
     Quarter     Quarter     Quarter     Quarter     Total     Quarter     Quarter     Quarter     Quarter     Total
Revenues$       43,861$       43,987$       44,340$       48,391$       180,579$       65,429$       69,808$       74,675$       70,807$       280,719
Gross profit $13,676 $14,135 $14,032 $15,050 $56,89323,52625,30326,57427,556102,959
Gross margin31.2%32.1% 31.6% 31.1% 31.5%36.0%36.2%35.6%38.9%36.7%
Net income$4,182$3,659$4,155$32,630$44,6264,0593,4993,8765,50616,940
Earnings per diluted share$0.14$0.12$0.14$1.06$1.490.110.100.100.150.46

Fiscal 2012Fiscal 2015
FirstSecondThirdFourthFirstSecondThirdFourth
     Quarter     Quarter     Quarter     Quarter     Total     Quarter     Quarter     Quarter     Quarter     Total
Revenues $       34,554$       33,801$       32,752$       37,621 $       138,728$       58,981$       59,210$       63,225$       69,190$       250,606
Gross profit$9,432 $11,825 $10,169$10,593$42,019 20,21920,49622,10424,58587,404
Gross margin 27.3% 35.0%31.0% 28.2% 30.3%34.3%34.6%35.0%35.5%34.9%
Net income$520$1,356$1,700 $1,642$5,2182,6933,2784,0216,51616,508
Earnings per diluted share$0.02$0.05$0.06$0.06$0.180.070.090.110.180.45

58


The net income in the fiscal 2016 fourth quarter includes acquisition expenses of $2.0 million related to the acquisition of LoJack, an unrealized gain on investment in LoJack common stock of $1.4 million, a litigation provision of $2.9 million, and an income tax benefit of $2.4 million primarily attributable to the reduction of the deferred tax assets valuation allowance and the recognition of federal R&D tax credits. The LoJack acquisition is discussed in Note 18. The loss contingency from litigation is described in Note 15 – Legal Proceedings.

NOTE 1618 – SUBSEQUENT EVENTS

New Bank Term LoanLoJack Acquisition

OnAs of March 4, 2013,15, 2016, the Company entered intoacquired effective control of LoJack through a new term loan with Square 1 Bank andtender offer process that resulted in CalAmp owning 80.2% of LoJack’s outstanding shares of common stock, for which it paid off an existing term loan that had an outstanding principal balancea purchase price per share of $1.8 million. See Note 6 for additional details.

Wireless Matrix Acquisition

    On$6.45. Three days later on March 4, 2013, the Company18, 2016, CalAmp completed the acquisition of all outstanding capital stockLoJack by effecting a merger in which the LoJack shares not validly tendered were canceled and converted into the right to receive the merger consideration of Wireless Matrix USA, Inc. (“Wireless Matrix”). Under the terms$6.45 per share. As a result, LoJack became a wholly-owned subsidiary of the agreement, the Company acquired Wireless Matrix for a cash payment of $52.9 million, subject to adjustment. The assets acquired by the Company included cash of approximately $6 million.Company. The Company funded the acquisition from on-hand cash, cash equivalents and marketable securities. The total purchase price fromwas $130.7 million, which included the net proceeds$5.5 million fair value of its recently completed equity offeringthe 850,100 shares of $44.8 million,LoJack common stock that CalAmp purchased in the net proceeds fromopen market in November and December 2015, prior to entering into a definitive acquisition agreement with LoJack.

The acquisition will be accounted for as business combination. Since the new bank term loan described above,closing of this acquisition occurred subsequent to the Company’s fiscal year-end, the allocation of the purchase price to the underlying assets acquired and cash on hand.



    The Companyliabilities assumed is subject to a formal valuation process, which has not yet obtained all information required to completebeen completed. The Company will include the purchase price allocation related to this acquisition. The final allocation will be completed in fiscal 2014. Following is the unaudited preliminary purchase price allocation (in thousands):

           Purchase Price          $52,857
Less Cash acquired(6,149)
       Net cash paid 46,708
Fair value of net assets acquired:
       Current assets other than cash6,362  
       Property and equipment1,683 
       Customer lists14,440
        Developed/core technology 11,180 
        Current liabilities        (4,331)
              Total fair value of net assets acquired29,334
Goodwill$        17,374

in the first quarter of fiscal 2017. The Company paidpurchase price allocation will be finalized as soon as practicable within the measurement period, but not later than one year following the acquisition date.

Cessation of Key Customer Relationship

Subsequent to the end of fiscal 2016, EchoStar notified CalAmp that, as a premium (i.e., goodwill) overresult of a consolidation of its supplier base in specific areas of its business to better align with its future requirements and its reduced demand for the fair valueproducts that we currently supply, it has determined that it will discontinue purchasing products from CalAmp at the end of the net tangible and identified intangible assets acquired. The Company expects to leverage Wireless Matrix’s mobile workforce management and asset tracking applications to build upon its current product offeringsdemand forecast. EchoStar’s current product demand forecast extends through August 2016. As a result of EchoStar’s decision, CalAmp expects sales to this customer will cease after the second quarter of fiscal 2017. CalAmp is currently evaluating its Satellite business, but in light of the fact that EchoStar accounts for its customers inessentially all of the Energy, Government and Transportation markets. It also believes an opportunity exists to expand its turnkey offerings to global enterprise customers in new vertical markets such as Construction, Agriculture and Mining, among others. The Company believesrevenue of the Satellite segment, CalAmp expects that this acquisitionportion of its operations will accelerate its development roadmap, enable it to offer higher margin turnkey solutions for new and existing customers, and further increase its relevance with mobile network operators and key channel partners in the global M2M marketplace.

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

    Following is unaudited supplemental pro forma information presented as if the acquisition had occurred on March 1, 2011. The pro forma financial information is not necessarily indicative of what the Company's actual results of operations would have been had Wireless Matrix been included in the Company's historical consolidated financial statements for years ended February 28, 2013 and 2012. In addition, the pro forma financial information does not attempt to project the future results of operations of the combined company.

(in thousands)
 
Pro Forma Year Ended
February 28,
     2013     2012
Revenue$     208,219 $     164,927
 
Net Income (loss) $37,467 $(296)

    The pro forma adjustments for the year ended February 28, 2013 and 2012 consist of adding Wireless Matrix's results of operations for the 12-month periods ended January 31, 2013 and April 30, 2012, respectively. Wireless Matrix’s three-month period ended April 30, 2012 is included in the pro forma revenue and net income (loss) for both 12-month periods. Wireless Matrix had revenues and a net loss of $8,883,000 and $(187,000), respectively, in this duplicated three-month period.

    The pro forma net income (loss) above includes additional amortization expense of $4,751,000 in both of these 12-month periods related to the estimated fair value of identifiable intangible assets arising from the preliminary purchase price allocation.be discontinued during fiscal 2017.

ITEM 9. 

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


Not applicable.

48


ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company's principal executive officer and principal financial officer have concluded, based on their evaluation of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")Exchange Act)) as of February 28, 2013,29, 2016, that the Company's disclosure controls and procedures are effective, at the reasonable assurance level, 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 to allow such information to be recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission.

59


Management's Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended.

The Company’s management has assessed the effectiveness of the Company's internal control over financial reporting as of February 28, 2013.29, 2016. In making this assessment, management used criteria set forth in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in "Internal Control - Integrated Framework".Commission. Based on its assessment, management of the Company has concluded that as of February 28, 201329, 2016 the Company's internal control over financial reporting is effective based on those criteria.

The effectiveness of the Company’s internal control over financial reporting as of February 28, 201329, 2016 has been audited by SingerLewakBDO USA, LLP, an independent registered public accounting firm, as stated in their report which is included in Part II, Item 8 of this Annual Report.below.

Changes in Internal Control over Financial Reporting

There were no changes in the Company's internal control over financial reporting during the fourth quarter of fiscal 20132016 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

60


Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders
CalAmp Corp.
Irvine, California

We have audited CalAmp Corp.’s internal control over financial reporting as of February 29, 2016, based on criteria established inInternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). CalAmp Corp.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, CalAmp Corp. maintained, in all material respects, effective internal control over financial reporting as of February 29, 2016, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of CalAmp Corp. as of February 29, 2016, and the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for the year then ended and our report dated April 19, 2016 expressed an unqualified opinion thereon.

/s/ BDO USA, LLP

Los Angeles, California
April 19, 2016

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ITEM 9B. OTHER INFORMATION

Compensatory Arrangements of Executive Officers

On April 22, 2013,14, 2016, the Board of Directors of the Company, upon the recommendation of the Compensation Committee, established the target and maximum bonuses and performance goals under the fiscal 20132017 executive officer incentive compensation plan. The individuals covered by the fiscal 20132017 executive officer incentive compensation plan are:

  • Michael Burdiek
  • Richard Vitelle
  • Garo Sarkissian

President and Chief Executive Officer

Executive Vice President, CFO and Secretary/Treasurer

Senior Vice President, Corporate Development

●

Michael Burdiek

President and Chief Executive Officer

●

Richard Vitelle

Executive Vice President, CFO and Secretary/Treasurer

●

Garo Sarkissian

Senior Vice President, Corporate Development

Mr. Burdiek is eligible for target and maximum bonuses of up to 100% and 150%, respectively, of his annual salary. Mr. Vitelle is eligible for target and maximum bonuses of up to 55%65% and 110%120%, respectively, of his annual salary. Mr. Sarkissian is eligible for target and maximum bonuses of up to 50%55% and 100%110%, respectively, of his annual salary. The target and maximum bonus amounts for all executive officers are based on the Company attaining certain levels of consolidated revenue and consolidated earnings before interest, taxes, depreciation, amortization and amortization (EBITDA)certain other adjustments (Adjusted EBITDA) for fiscal 2014.2016.



PART III

ITEM 10. 

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information about executive officers is included in Part I, Item 1 of this Annual Report on Form 10-K.

The following information required by this Item will be included in the Company's definitive proxy statement for the Annual Meeting of Stockholders to be held on July 25, 201326, 2016 and is incorporated herein by this reference:

  • Information regarding directors of the Company.
  • Information regarding the Company's Audit Committee and designated "audit committee financial experts".
  • Information on the Company's "Code of Business Conduct and Ethics" for directors, officers and employees.
●

Information regarding directors of the Company.

●

Information regarding the Company's Audit Committee and designated “audit committee financial experts”.

●

Information on the Company's “Code of Business Conduct and Ethics” for directors, officers and employees.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item will be set forth under the caption "Executive Compensation"“Executive Compensation” in the Company's definitive proxy statement for the Annual Meeting of Stockholders to be held on July 25, 201326, 2016 and is incorporated herein by this reference.

ITEM 12. 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item will be set forth under the caption "Stock Ownership"“Stock Ownership” in the Company's definitive proxy statement for the Annual Meeting of Stockholders to be held on July 25, 201326, 2016 and is incorporated herein by this reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

62


ITEM 13. 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information contained under the captions "Certain“Certain Relationships and Related Transactions"Transactions” and "Director Independence"“Director Independence” in the Company's definitive proxy statement for the Annual Meeting of Stockholders to be held on July 25, 201326, 2016 is incorporated herein by reference in response to this item.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item will be set forth under the caption "Independent“Independent Public Accountants"Accountants” in the Company's definitive proxy statement for the Annual Meeting of Stockholders to be held on July 25, 201326, 2016 and is incorporated herein by reference.

50


PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)

(a) The following documents are filed as part of this Report:

        1.        
1.

The following consolidated financial statements of CalAmp Corp. and subsidiaries are filed as part of this report under Item 8 – Financial Statements and Supplementary Data:


Form 10-K
      Page No.
Reports of Independent Registered Public Accounting FirmFirms25-2630-31
 
Consolidated Balance Sheets2732
 
Consolidated Statements of OperationsComprehensive Income33
       and Comprehensive Income (Loss)28
 
Consolidated Statements of Stockholders' Equity2934
 
Consolidated Statements of Cash Flows3035
 
Notes to Consolidated Financial Statements3136
2.

Financial Statements Schedules:


    2.Financial Statements Schedules:

Schedule II – Valuation and Qualifying Accounts is included in the consolidated financial statements which are filed as part of this report under Item 8 – Financial Statements and Supplementary Data.

All other financial statement schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.

3.     

Exhibits

    3.Exhibits

Exhibits required to be filed as part of this report are:

Exhibit
Number      Description 
2.1Agreement and Plan of Merger, dated as of February 1, 2016, by and among LoJack Corporation, CalAmp Corp. and Lexus Acquisition Sub, Inc. (incorporated by reference to Exhibit 2.1 on Form 8-K dated February 1, 2016).
63


3.1Amended and Restated Certificate of Incorporation reflecting the increase in authorized common stock from 40 million to 80 million shares (incorporated by reference to Exhibit 3.1 of the Company's Report on Form 10-Q for the period ended August 31, 2012)2014).
 
3.2Bylaws of the Company (incorporated by reference to Exhibit 3.2 of the Company's Annual Report on Form 10-K10-Q for the yearperiod ended February 28, 2005)August 31, 2014).
4.1Indenture, dated May 6, 2015, between CalAmp Corp and The Bank of New York Mellon Trust Company, N.A. (incorporated by reference to Exhibit 4.1 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
4.2Form of 1.625% Convertible Senior Notes due May 15, 2020 (incorporated by reference to Exhibit 4.2 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
10.Material Contracts:
 
(i)Other than Compensatory PlanPlans or Arrangements:
 
10.1Building lease dated June 10, 2003 between the Company and Sunbelt Enterprises for facility in Oxnard, California (incorporated by reference to Exhibit 10-1 filed with the Company's Report on Form 10-Q for the quarter ended May 31, 2003).



10.2First Amendment to building lease dated December 20, 2010 between the Company and Sunbelt Enterprises for facility in Oxnard, California (incorporated by reference to Exhibit 10.2 of the Company's Report on Form 10-K for the year ended February 28, 2011).
 
10.3Second Amendment to building lease dated November 5, 2015 between the Company and PR 1401 Rice, LLC (successor in interest to Sunbelt Enterprises) for facility in Oxnard, California.
10.4Form of Directors and Officers Indemnity Agreement (incorporated by reference to Exhibit 10.3 of the Company's Annual Report on Form 10-K for the year ended February 28, 2005).
 
10.410.5Loan and Security Agreement dated December 22, 2009 between Square 1 Bank, CalAmp Corp. and CalAmp's domestic subsidiaries (incorporated by reference to Exhibit 10.1 filed with the Company's Current Report on Form 8-K dated December 22, 2009).
 
10.510.6Amendment dated March 24, 2010 to Loan and Security Agreement between Square 1 Bank, CalAmp Corp. and CalAmp's domestic subsidiaries (incorporated by reference to Exhibit 10.7 of the Company's Annual Report on Form 10-K for the year ended February 28, 2010).
 
10.610.7Amendment dated December 22, 2010 to Loan and Security Agreement between Square 1 Bank, CalAmp Corp. and CalAmp’s domestic subsidiaries (incorporated by reference to Exhibit 10.1 of the Company's Report on Form 10-Q for the period ended November 30, 2010).
 
10.710.8Amendment dated August 15, 2011 to Loan and Security Agreement between Square 1 Bank, CalAmp Corp. and CalAmp’s domestic subsidiaries (incorporated by reference to Exhibit 10.1 of the Company's Report on Form 8-K dated August 15, 2011).
 
10.810.9Amendment dated March 1, 2013 to Loan and Security Agreement between Square 1 Bank, CalAmp Corp. and CalAmp’s principal domestic subsidiary (incorporated by reference to Exhibit 10.1 of the Company's Report on Form 8-K dated March 1, 2013).
 
10.10Confirmation of Base Call Option Transaction, dated April 30, 2015, between CalAmp Corp andJefferies International Limited (incorporated by reference to Exhibit 10.1 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
10.11Confirmation of Base Call Option Transaction, dated April 30, 2015, between CalAmp Corp and JPMorgan Chase Bank, National Association, London Branch (incorporated by reference to Exhibit 10.2 of the Company's Report on Form 10-Q for the period ended May 31, 2015).

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10.12Confirmation of Base Call Option Transaction, dated April 30, 2015, between CalAmp Corp and Barclays Bank PLC (incorporated by reference to Exhibit 10.3 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
10.13Confirmation of Base Call Option Transaction, dated April 30, 2015, between CalAmp Corp and Nomura Global Financial Products Inc. (incorporated by reference to Exhibit 10.4 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
10.14Confirmation of Warrant Transaction, dated April 30, 2015, between CalAmp Corp and Jefferies International Limited (incorporated by reference to Exhibit 10.5 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
10.15Confirmation of Warrant Transaction, dated April 30, 2015, between CalAmp Corp and JPMorgan Chase Bank, National Association, London Branch (incorporated by reference to Exhibit 10.6 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
10.16Confirmation of Warrant Transaction, dated April 30, 2015, between CalAmp Corp and Barclays Bank PLC (incorporated by reference to Exhibit 10.7 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
10.17Confirmation of Warrant Transaction, dated April 30, 2015, between CalAmp Corp and Nomura Global Financial Products Inc. (incorporated by reference to Exhibit 10.8 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
10.18Confirmation of Additional Call Option Transaction, dated May 21, 2015, between CalAmp Corp and Jefferies International Limited (incorporated by reference to Exhibit 10.9 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
10.19Confirmation of Additional Call Option Transaction, dated May 21, 2015, between CalAmp Corp and JPMorgan Chase Bank, National Association, London Branch (incorporated by reference to Exhibit 10.10 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
10.20Confirmation of Additional Call Option Transaction, dated May 21, 2015, between CalAmp Corp and Barclays Bank PLC (incorporated by reference to Exhibit 10.11 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
10.21Confirmation of Additional Call Option Transaction, dated May 21, 2015, between CalAmp Corp and Nomura Global Financial Products Inc. (incorporated by reference to Exhibit 10.12 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
10.22Confirmation of Additional Warrant Transaction, dated May 21, 2015, between CalAmp Corp and Jefferies International Limited (incorporated by reference to Exhibit 10.13 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
10.23Confirmation of Additional Warrant Transaction, dated May 21, 2015, between CalAmp Corp and JPMorgan Chase Bank, National Association, London Branch (incorporated by reference to Exhibit 10.14 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
10.24Confirmation of Additional Warrant Transaction, dated May 21, 2015, between CalAmp Corp and Barclays Bank PLC (incorporated by reference to Exhibit 10.15 of the Company's Report on Form 10-Q for the period ended May 31, 2015).
10.25Confirmation of Additional Warrant Transaction, dated May 21, 2015, between CalAmp Corp and Nomura Global Financial Products Inc. (incorporated by reference to Exhibit 10.16 of the Company's Report on Form 10-Q for the period ended May 31, 2015).

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(ii)   Compensatory Plans or Arrangements required to be filed as Exhibits to this Report pursuant to Item 15 (b) of this Report:
 
10.9Share Purchase Agreement by and among CalAmp Corp, Wireless Matrix Corporation and Wireless Matrix USA, Inc. dated December 20, 2012 (incorporated by reference to Exhibit 2.1 of the Company's Current Report on Form 8-K dated December 20, 2012).
10.10The 1999 Stock Option Plan (incorporated by reference to Exhibit 4.1 of the Company's Registration Statement No. 333-93097 on Form S-8)
10.1110.26CalAmp Corp. 2004 Incentive Stock Incentive Plan as amended and Restated (incorporated by reference to Exhibit A of the Company's Definitive Proxy Statement filed on June 24, 2009)16, 2014).
 
10.1210.27Employment Agreement between the Company and Richard Vitelle dated May 31, 2002 (incorporated by reference to Exhibit 10.9 of the Company's Annual Report on Form 10-K for the year ended February 28, 2004).
 
10.1310.28Employment Agreement between the Company and Michael Burdiek effective June 1, 2011 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K dated May 27, 2011).
 
10.1410.29Employment Agreement between the Company and Garo Sarkissian dated July 2, 2007 (incorporated by reference to Exhibit 10.2 of the Company's Report on Form 10-Q for the period ended May 31, 2007).
 
10.1510.30Form of Amendmentamendment to Executive Officer Employment Agreementexecutive officer employment agreement dated December 19, 2008 (incorporated by reference to Exhibit 10.1 of the Company's Report on Form 10-Q for the period ended November 29, 2008).
 
10.31Amendments to executive officer employment agreements dated June 12, 2013 (incorporated by reference to Exhibits 10.1, 10.2 and 10.3 of the Company's Report on Form 8-K filed on June 14, 2013).
10.32Amendment No. 2 to Employment Agreement between the Company and Michael Burdiek dated May 30, 2014 (incorporated by reference to Exhibit 10.2 of the Company’s Report on Form 10-Q for the period ended May 31, 2014).
10.33Amendment No. 3 to Employment Agreement between the Company and Richard Vitelle dated May 31, 2014 (incorporated by reference to Exhibit 10.3 of the Company’s Report on Form 10-Q for the period ended May 31, 2014).
10.34Amendment No. 3 to Employment Agreement between the Company and Garo Sarkissian dated May 30, 2014 (incorporated by reference to Exhibit 10.4 of the Company’s Report on Form 10-Q for the period ended May 31, 2014).
21Subsidiaries of the Registrant.
 
23.1Consent of Independent Registered Public Accounting Firm.BDO USA, LLP.
23.2Consent of SingerLewak LLP.
 
31.1Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
31.2Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
32Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
               
101Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of February 28, 20132016 and 2012,2015, (ii) Consolidated Statements of OperationsComprehensive Income for the years ended February 28, 2013, 20122016, 2015 and 2011,2014, (iii) Consolidated Statement of Stockholders’ Equity for the years ended February 28, 2013, 20122016, 2015 and 2011,2014, (iv) Consolidated Statements of Cash Flows for the years ended February 28, 2013, 20122016, 2015 and 2011,2014, and (v) Notes to Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on April 25, 2013.19, 2016.

CALAMP CORP.
By: /s/ Michael Burdiek
Michael Burdiek
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SignatureTitleTitleDate
/s/ Frank Perna, Jr.A.J. MoyerChairman of the Board of DirectorsApril 25, 201319, 2016
     Frank Perna, Jr.A.J. Moyer
 
 
/s/ Kimberly AlexyDirectorApril 25, 201319, 2016
     Kimberly Alexy
 
/s/ Richard GoldJeffery GardnerDirectorApril 25, 201319, 2016
     Richard GoldJeffery Gardner
 
/s/ A.J. MoyerAmal JohnsonDirectorApril 25, 201319, 2016
     A.J. MoyerAmal Johnson
 
/s/ Thomas PardunJorge TitingerDirectorApril 25, 201319, 2016
     Thomas PardunJorge Titinger
 
/s/ Larry WolfeDirectorApril 25, 201319, 2016
     Larry Wolfe
 
/s/ Michael BurdiekPresident, Chief Executive Officer and
     Michael Burdiek       Director (principal executive officer)April 25, 201319, 2016
 
/s/ Richard VitelleExecutive Vice President, CFO and Secretary/
     Richard Vitelle       Treasurer (principal accounting and
       financial officer)April 25, 201319, 2016

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