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

Form 10-Q

(Mark One)

For the transition period from           to

COMMISSION FILE NUMBER: 0-12182

________________

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒No☐

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

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

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

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

The number of shares outstanding of the registrant’s common stock as of December 15, 2016June 23, 2017 was 35,412,382.35,396,641.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

See accompanying notes to consolidated financial statements.

CALAMP CORP.

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

See accompanying notes to consolidated financial statements.

CALAMP CORP.

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

See accompanying notes to consolidated financial statements.

CALAMP CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED NOVEMBER 30,MAY 31, 2017 AND 2016 AND 2015

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

Description of Business

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

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

Products of the Company's Satellite segment were sold to EchoStar, an affiliate of Dish Network, for incorporation into complete subscription satellite television systems. In April 2016, EchoStar notifiedwhich brought the Company that it would stop purchasing products from the Company at the end of its then-current product demand forecasta vast U.S. auto dealer channel as a result of a consolidation of its supplier base. EchoStar’s product demand forecast with the Company extended through August 2016, and the products covered by this forecast were substantially all shipped prior to August 31, 2016. In light of the fact that EchoStar accounted for essentially all of the revenues of the Satellite segment, the Company’s Satellite business was shut down effective August 31, 2016.well as an established international licensee network.

Certain notes and other information included in the audited financial statements included in the Company’sCompany's Annual Report on Form 10-K for the year ended February 28, 2017 are condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the Company’s 20162017 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on April 20, 2016.May 15, 2017.

In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the Company’s financial position at November 30, 2016May 31, 2017 and its results of operations for the three and nine months ended November 30, 2016May 31, 2017 and 2015.2016. The results of operations for such periods are not necessarily indicative of results to be expected for the full fiscal year.

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

Revenue Recognition

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

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

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

In the United States, sales of a combined LoJack Stolen Vehicle Recovery (“LoJack SVR”) unit and Early Warning unit constitute a multiple element arrangement under ASC 605 Subtopic 25. The combined LoJack SVR and Early Warning product includes LoJack SVR hardware, Early Warning hardware, installation service, and an Early Warning ongoing automated notification service, which is later.provided over the period of vehicle ownership.

The delivered elements of a multiple element arrangement (LoJack SVR hardware and Early Warning hardware and installation service) must meet certain criteria to qualify each component of the combined LoJack SVR and Early Warning product for separate accounting. The Company performed an analysis and determined that each of the delivered elements in the arrangement qualify for separate accounting based on the applicable guidance.

The LoJack SVR and Early Warning hardware and installation service components of each sale are considered to have met delivery requirements for revenue recognition upon installation of the LoJack SVR and Early Warning product; however, revenue from the ongoing notification service, as well as the tracking and recovery service in Canada, are deferred and recognized over an estimated life of new vehicle ownership.

In Italy, the purchase of an initial vehicle monitoring service contract is a requirement at the time the consumer purchases a LoJack SVR product. Revenue for these contracts is recognized over the life of the contract. These contracts, which are sold separately from the LoJack SVR hardware, are offered for terms ranging from 8 to 96 months and are generally payable in full upon activation of the related unit or renewal of a previous contract. Customers are also offered a month-to-month option for service contracts.

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

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

Cash and Cash Equivalents

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

Fair Value Measurements

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

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

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

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

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

Foreign Currency Translation and Accumulated Other Comprehensive Loss AccountRecently Adopted Accounting Standards

A cumulative foreign currency translation loss of $406,000 relatedIn March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). This update was intended to simplify the Company’s foreign subsidiaries is included in accumulated other comprehensive lossaccounting for share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the stockholders’ equity sectionstatement of cash flows. The Company adopted this standard during the quarter ended May 31, 2017. Accordingly, effective March 1, 2017, the Company recorded a cumulative adjustment benefit of $11.7 million for the excess tax benefit from the exercise of stock options and vesting of restricted stock awards and restricted stock units that occurred in prior fiscal years as an increase in deferred income tax assets and a reduction of the consolidated balance sheet at November 30, 2016.accumulated deficit. The aggregate foreign currency transaction exchange rate losses included in determining income (loss) before income taxes and equity in net loss of affiliate were $173,000 and $31,000excess tax benefits recognized on stock-based compensation expense are classified as an operating activity in the nine months ended November 30, 2016 and 2015, respectively.Company's consolidated statements of cash flows. Finally, the Company elected to account for forfeitures as they occur, rather than estimating expected forfeitures over the course of a vesting period.

Recently Issued Accounting Standards

In May 2017, the FASB issued Accounting Standards Update 2017-09, Compensation – Stock Compensation: Scope of Modification Accounting (“ASU 2017-09”). The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The adoption of ASU 2017-09, which will become effective for annual periods beginning after December 15, 2017, is not expected to have a material impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued Accounting Standards Update 2017-04, Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). The new guidance eliminates Step 2 from the goodwill impairment test and instead requires that an entity measure the impairment of goodwill assigned to a reporting unit if the carrying value of assets and liabilities assigned to the reporting unit, including goodwill, exceed the reporting unit's fair value. The new guidance must be adopted for annual and interim goodwill tests in fiscal years beginning after December 15, 2019. After the adoption of this standard, which will be applied prospectively, the Company will follow a one-step model for goodwill impairment. The Company does not anticipate a significant impact on its consolidated financial statements upon adoption.

In June 2016, the Financial Accounting Standards Board ("FASB")FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses. This update amends the FASB’s guidance on the impairment of financial instruments. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. This update is effective for fiscal years beginning after December 15, 2019. Early2019, and early adoption will beis permitted. The Company does not anticipate a significant impact on theits consolidated financial statements upon adoption.

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

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements at the time of adoption, with certain practical expedients available. Early adoption is permitted. The Company is currently evaluatinghas not completed the impact of adoptionassessment of the new standardimpact on its consolidated financial statements.statements, but expects to record a ROU asset and lease liability.

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

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The two permitted transition methods under the new standard are the full retrospective method, in which the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which the cumulative effect of applying the standard would be recognized at the date of initial application. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferralapproved the deferral of the Effective Date, which deferred thenew standard's effective date of this revenueby one year. The new standard is effective for annual reporting periods beginning after December 15, 2017, and accordingly the Company is required to adopt this standard effective March 1, 2018, the beginning of its fiscal 2019. In addition, the FASB issued ASU 2016-08, ASU 2016-10 and ASU 2016-12 in March 2016, April 2016 and May 2016, respectively, to December 15, 2017, with early adoption permitted but not earlier thanprovide interpretive clarifications on the original effective date. ASU 2014-09 must be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption.new revenue recognition accounting standard. The Company is continuing to evaluate the effectcurrently developing an implementation roadmap and methodology of adopting this accounting standard on its results of operations, cash flows and financial position.

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

Reclassifications

Certain amounts in the financial statements of prior years have been reclassified to conform to the fiscal 2017 presentation, with no effect on net earnings.

NOTE 2 – LOJACK ACQUISITION

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

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

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

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

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

In connection with the acquisition of LoJack, the Company has assumed liabilities related to quality assurance programs, warranty claims and contract obligations which are included in accrued expenses and other current liabilities in the purchase price allocation described above. The fair value of inventories acquired included a purchase accounting fair market value step-up of $4.6 million. In the nine months ended November 30, 2016, the Company recognized $4.3 million of this markup as a component of cost of revenues that reflects the extent to which the inventory that was subject to step-up was sold to the Company’s customers in such period. Included in inventory as of November 30, 2016 was $0.3 million relating to the remaining fair value step-up associated with the LoJack acquisition.

In August 2016, the Company received an independent appraisal of LoJack’s property and equipment, which resulted in a purchase accounting fair market value step-up of $2.6 million. In the nine months ended November 30, 2016, the Company recognized $0.5 million of this markup as a component of cost of revenues and operating expenses that reflects the extent to which the property, equipment and improvements that were subject to the step-up were depreciated.

Acquisition and integration-related costs of $0.6 million and $4.2 million were included in selling, general, and administrative expenses in the Company's statements of comprehensive income (loss) for the three and nine months ended November 30, 2016.

Revenues of LoJack included in the consolidated statements of operations for the three and nine months ended November 30, 2016 were $29.9 million and $89.7 million, respectively. Post-acquisition earnings of LoJack on a standalone basis are impracticable to determine, because immediately following the acquisition CalAmp began to integrate LoJack into its existing operations.

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

(in thousands except per share amounts)

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

The pro forma consolidated financial information is not necessarily indicative of what the Company's actual results of operations would have been had LoJack been included in the Company's historical consolidated financial statements for each of the nine month periods ended November 30, 2016 and 2015. In addition, the pro forma consolidated financial information does not attempt to project the future results of operations of the combined company.

NOTE 32 – CASH, CASH EQUIVALENTS AND INVESTMENTS

The following tables summarize the Company’s financial instrument assets as of November 30, 2016May 31, 2017 and February 29, 201628, 2017 using the hierarchy described in Note 1 under the heading “Fair Value Measurements” (in thousands):

NOTE 4 -3 – INVENTORIES

Inventories consist of the following (in thousands):

NOTE 54 – 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):

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

Estimated future amortization expense for the fiscal years ending February 28 is as follows (in thousands):

NOTE 65 – OTHER ASSETS

Other assets consist of the following (in thousands):

IncludedThe Company has a non-qualified deferred compensation plan in which certain members of management and all non-employee directors are eligible to participate. Participants may defer a portion of their compensation until retirement or a date specified by the participant in accordance with the plan. The Company informally funds 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 assets of the LoJack acquisition are investmentsaccompanying consolidated balance sheets.

The investment in international licensees at the preliminary valuation of $2,256,000 consisting$2,351,000 as of May 31, 2017 consists of a 12.5% equity interest in LoJack’s Mexican licensee of $1,541,000,$1,700,000, a 17.5% equity interest in LoJack’s Benelux licensee of $500,000,$340,000, and a 5.5% interest in LoJack’s French licensee of $215,000.$311,000. The Company has not yet obtained all information required to complete the valuation ofinvestments in the Mexican and Benelux investments.licensees, over which the Company does not exercise significant influence, are accounted for using the cost method of accounting and are carried at cost, which represents their fair value as measured on the date of the Company’s acquisition of LoJack. The investment in LoJack’s French licensee, in the form of a marketable equity security, is accounted for as an available-for-sale security and is valued at the quoted closing price on its market exchange as of the reporting date.

The equity investment and loans toIn September 2015, the Company’s UK affiliate of $1,407,000 includeCompany invested £1,400,000 or approximately $2,156,000 for a 49% equityminority ownership interest in and loans to Smart Driver Club Limited. TheLimited (“Smart Driver Club”), 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 affiliateSmart Driver Club amounted to $1.0 million for$337,000 and $312,000 in the ninethree months ended November 30, 2016.May 31, 2017 and 2016, respectively. The Company made loans aggregating $1.4 million$2,636,000 denominated in British pounds to Smart Driver Club Limited bearing interest at an annual interest rate of 8%, with all principal of £1.0 million£2,000,000 and all unpaid interest due in 2020.

LoJack became a wholly-owned subsidiary of the Company in March 2016, at which time the The foreign currency translation adjustment for this equity investment in LoJack common stock of $5.5 millionamounted to $220,000 as of February 29, 2016 became partMay 31, 2017 and is included as a component of Accumulated Other Comprehensive Loss in the purchase priceconsolidated balance sheet as of the LoJack acquisition, as described in Note 2.that date.

NOTE 7 - FINANCING ARRANGEMENTS

Bank Credit Facility

The Company has a credit facility with Square 1 Bank that provides for borrowings up to $15 million or 85% of eligible accounts receivable, whichever is less. The credit facility expires on March 1, 2017. Borrowings under this line of credit bear interest at the bank’s prime rate. There were no borrowings outstanding under this credit facility at November 30, 2016 or February 29, 2016.

The bank credit facility contains financial covenants that require the Company to maintain a minimum level of earnings before interest, income taxes, depreciation, amortization and other noncash charges (EBITDA) and a minimum debt coverage ratio, both measured monthly on a rolling 12-month basis. At November 30, 2016, the Company was in compliance with its debt covenants under the credit facility.

1.625% Convertible Senior Unsecured Notes6 – CONVERTIBLE SENIOR UNSECURED NOTES

As of November 30, 2016,May 31, 2017, the Company had $172.5 million aggregate principal amount of convertible senior unsecured notes (the “Notes”) outstanding. The Notes are senior unsecured obligations of the Company and bear interest at a rate of 1.625% per year payable in cash on May 15 and November 15 of each year beginning on November 15, 2015.year. The Notes will mature on May 15, 2020 unless earlier converted or repurchased in accordance with their terms. The Company may not redeem the Notes prior to their stated maturity date. The Notes will be convertible into cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election, based on an initial conversion rate of 36.2398 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of $27.594 per share of common stock, subject to customary adjustments. Holders may convert their Notes at their option at any time prior to November 15, 2019 upon the occurrence of certain events in the future, as defined in the indenture agreement dated May 6, 2015 (the “Indenture”). During the period from November 15, 2019 to May 13, 2020, holders may convert all or any portion of their Notes regardless of the foregoing conditions. The Company’s intent is to settle the principal amount of the Notes in cash upon conversion. If the conversion value exceeds the Note principal amount, the Company would deliver shares of its common stock in respect to the remainder of its conversion obligation in excess of the aggregate principal amount (the “conversion spread”). The shares associated with the conversion spread, if any, would be included in the denominator for the computation of diluted earnings per share, with such shares calculated using the average closing price of the Company’s common stock during each period. As of November 30, 2016,May 31, 2017, none of the conditions allowing holders of the Notes to convert have been met.

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

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

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

The Notes are carried at their principal amount, net of unamortized debt discount and issuance costs, and are not carried atadjusted to fair value at each period end.period. The issuance date fair value of the liability component of the Notes in the amount of $138.9 million was determined using a discounted cash flow analysis, in which the projected interest and principal payments were discounted back to the issuance date of the Notes at a market interest rate for nonconvertible debt of 6.2%, which represents a Level 3 fair value measurement. The debt discount of $33.6 million is being amortized to interest expense using the effective interest method with an effective interest rate of 6.2% over the period from the issuance date through the contractual maturity date of the Notes of May 15, 2020. The approximate fair value of the Notes as of November 30, 2016May 31, 2017 was $166$172.8 million, which was estimated on the basis of inputs that are observable in the market and which is considered a Level 2 measurement method in the fair value hierarchy.

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

NOTE 8 -7 – INCOME TAXES

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

The Company files income tax returns in the U.S. federal jurisdiction, various U.S. states and Puerto Rico, Canada, Ireland, Italy, the United Kingdom, Ireland, Italy,the Netherlands, Brazil Mexico, Uruguay and New Zealand. IncomeCertain income tax returns filed for fiscal year 2011 and earlier are not subjectyears 2013 through 2016 remain open to examination by U.S. federal and state tax authorities. CertainLoJack’s U.S. income tax returns for fiscal years 2012 through 20162015 remain open to examination by U.S. federal and state tax authorities. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods in which net operating losses or tax credits were generated and carried forward, and to make adjustments up to the net operating loss or tax credit carryforward amount. IncomeCalAmp’s Canadian subsidiaries’ income tax returns for fiscal years 2013 through 2016 remain open to examination by tax authorities in Canada, United Kingdom, Ireland,Canada. Most of the Company’s foreign subsidiaries’ tax returns for 2012 to present remain open for examination by the tax authorities in the countries in which they are filed, except in Italy and the Netherlands Brazil, Mexico, Uruguay, New Zealand, and Puerto Rico.where the tax returns filed from 2011 to present remain open for examination.

NOTE 9 -8 – EARNINGS PER SHARE

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

All outstanding options and restricted stock units in the amount of 995,000at May 31, 2017 and 1,266,000, respectively, at November 30, 2016 were excluded from the computation of diluted earnings per share for the three and nine month periods then ended because the Company reported a net loss for all periods presented and the effect of inclusion would be antidilutive. Shares subject to anti-dilutive stock options and restricted stock-based awards of 242,000 at November 30, 2015 were excluded from

As described in Note 6, the calculations of diluted earnings per share for the three and nine month periods then ended.

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

NOTE 10 – COMPREHENSIVE INCOME

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

The following table shows the changes in Accumulated Other Comprehensive Loss by component for the nine months ended November 30, 2016 (in thousands):

NOTE 119 – STOCKHOLDERS’ EQUITY

Stock Repurchase

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

During the nine months ended November 30, 2016, the Company repurchased 1.6 million shares of its common stock at an average share cost of $14.10, including commissions. The total cost of the stock repurchases during the nine months ended November 30, 2016 was $21.9 million. All of the stock repurchases were paid for as of November 30, 2016. All common stock repurchased was retired as of November 30, 2016. Of the $25 million authorized for stock repurchases, $3.1 million was remaining as of November 30, 2016.

Equity AwardsSTOCK-BASED COMPENSATION

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

Changes in the Company’s outstanding stock options during the ninethree months ended November 30, 2016May 31, 2017 were as follows (options in thousands):

Changes in the Company’s outstanding restricted stock shares, performance stock units (“PSUs”) and restricted stock units (“RSUs”) during the ninethree months ended November 30, 2016May 31, 2017 were as follows (shares,(restricted shares, PSUs and RSUs in thousands):

During the ninethree months ended November 30, 2016,May 31, 2017, the Company retained 110,8159,602 shares of the vested restricted stock and RSUs to satisfy the minimum required statutory amount of employee withholding taxes.

As of November 30, 2016,May 31, 2017, there was $19.1$15.0 million of total unrecognized stock-based compensation cost related to outstanding nonvested equity awards that is expected to be recognized as expense over a weighted-average remaining vesting period of 3.02.7 years.

NOTE 12 -10 – CONCENTRATION OF RISK

One Wireless DataCom customer in the heavy equipment industry accounted for 8%11% of consolidated revenue for the three months ended May 31, 2017, and 15%13% and 12% of consolidated accounts receivable at November 30, 2016May 31, 2017 and February 29, 2016,28, 2017, respectively.

The Company has contract manufacturing arrangements with sole source supplierselectronic manufacturing service providers for Mobile Resource Management (“MRM”), network and LoJack stolen vehicle recoverySVR products, transmission towers, and transmission towers. As of November 30, 2016, one suchcertain components and subassemblies. One supplier accounted for 11%28% and 47% of the Company’s total inventory purchases in the ninethree months ended November 30,May 31, 2017 and 2016, and 12% of the Company’s total accounts payable. Some of the Company’s other components, assemblies and electronic manufacturing services are also purchased from sole source suppliers. In addition, a substantial portion of the Company’s inventory is purchased from one supplier that functions as an independent foreign procurement agent and contract manufacturer. This supplier accounted for 37% and 55% of the Company’s total inventory purchases in the nine months ended November 30, 2016 and 2015, respectively. As of November 30, 2016,May 31, 2017, this supplier accounted for 34%36% of the Company’s total accounts payable. Another supplier accounted for 13%16% and 16%9% of the Company’s total inventory purchases in the ninethree months ended November 30,May 31 2017 and 2016, and 2015, respectively, and 18%19% of the Company’s total accounts payable as of November 30, 2016.May 31, 2017. Some of the Company’s products and subassemblies are purchased from sole source suppliers.

NOTE 13 -11 – PRODUCT WARRANTIES

The Company generally warrants its products against defects over periods ranging from 12 to 24 months.months, depending upon the product. An accrual for estimated future costs relating to products returned under warranty is recorded as an expense when products are shipped. At the end of each fiscal quarter, the Company adjusts its liability for warranty claims based on its actual warranty claims experience as a percentage of revenues for the preceding one to two years and also considers the impact of the known operational issues that may have a greater impact than historical trends. The warranty reserve is included in Other Current Liabilities in the unaudited consolidated balance sheets. Activity in the accrued warranty costs liability for the ninethree months ended November 30,May 31, 2017 and 2016 and 2015 is as follows (in thousands):

In September 2014, LoJack commenced a quality assurance program in the U.S. related to a battery performance issue in self-powered LoJack units under base or extended warranty. LoJack also entered into agreements to support quality assurance programs with all major international licensees that identified performance issues in certain self-powered units equipped with the battery pack. At November 30, 2016, the Company had a reserve of $0.8 million, which is included in the accrued warranty costs liability, for certain costs associated with this program in the U.S., quality assurance programs in other countries and markets, and other business concessions related to the battery performance matter as further described in Note 16. CalAmp anticipates that the U.S. quality assurance program will be completed by the end of fiscal 2018.

NOTE 1412 – OTHER FINANCIAL INFORMATION

Supplemental Balance Sheet Information

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

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

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

Supplemental StatementsStatement of Comprehensive Income (Loss)Operations Information

Investment income consists of the following (in thousands):

Interest expense consists of the following (in thousands):

Supplemental Cash Flow Information

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

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

NOTE 15 -13 – SEGMENT INFORMATION

Segment information for the three and nine months ended November 30, 2016 and 2015 is as follows (dollars in thousands):

The Company considers operating income to be a primary measure of operating performance ofmanages and operates its business segments.through one operating segment. Revenues by geographic area are as follows:

Revenues by geographic area are based upon the country of billing. The amount shown for each period ingeographic location of distributors and OEM customers may be different from the “Corporate Expenses” column above consists of expenses that are not allocated to the business segments. These non-allocated corporate expenses include salaries and benefits of certain corporate staff and expenses such as audit fees, investor relations, stock listing fees, director and officer liability insurance, and director fees and expenses.

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

In fiscal 2016 and the fiscal 2017 nine month period to November 30, 2016, Satellite segment revenuesCompany. No single foreign country accounted for only 14% and 6%, respectively,more than 10% of the Company’s consolidated revenues. After giving retroactive effect torevenue in the reclassification of generalthree months ended May 31, 2017 and administration expense from the Satellite segment to the Wireless DataCom segment for shared service expenses that will not be eliminated as a result of the Satellite business shutdown, Satellite segment operating income in fiscal 2016 and the fiscal 2017 nine month period represented 23% and 14%, respectively, of total business unit operating income, excluding corporate expenses not allocated to the business units of $6,480,000 and $7,129,000 in fiscal 2016 and the fiscal 2017 nine month period, respectively. Also, as a result of transitioning the Satellite business to a variable cost operating model in fiscal 2012, in which all Satellite product manufacturing was moved to a contract manufacturer, assets and liabilities of the Satellite segment represented only about 2% of consolidated assets and liabilities at the end of fiscal 2016. Accordingly, the Company believes that the shutdown of the Satellite segment does not qualify for discontinued operations accounting treatment because it represents neither a strategic shift nor did it have or will it have a major impact on the Company’s business or consolidated financial statements.

NOTE 16 - COMMITMENTS AND CONTINGENCIES14 – LEGAL PROCEEDINGS

Lease Commitments

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

Legal Proceedings

Omega patent infringement claim

In December 2013, a patent infringement lawsuit was filed against the Company by Omega Patents, LLC (“Omega”), a non-practicing entity. Omega alleged that certain of the Company’s vehicle tracking products infringed on certain patents assertedowned 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$2.975 million, for which CalAmp recorded a full reserve of $2.9 million in the fiscal 2016 fourth quarter. Following trial, Omega brought a motion seeking entry of judgment, an injunction and requesting the court to exercise its discretion to treble damages and assess attorneys’ fees. On April 5, 2017, the court denied the request for an injunction, but granted the request for treble damages. In addition, on April 24, 2017 the court awarded attorneys’ fees, costs, and prejudgment interest in the aggregate amount of $1.2 million, and directed the payment of royalties by CalAmp to Omega for any infringing sales after February 24, 2016 at a royalty rate to be determined. As a result of these April 2017 court rulings, the Company increased its reserve by $7.2 million in the fourth quarter of fiscal 2017.

On May 23, 2017, the Company and Omega stipulated, subject to the agreement of the court, to supplemental damages for sales of products found to infringe Omega’s patents from February 25, 2016 through April 5, 2017, plus an ongoing royalty for sales of the products deemed to infringe after April 5, 2017. The Company filed an oppositionis discontinuing the products that would be subject to Omega’s motion,this royalty and therefore does not believe that any future royalty amounts will be material. In the stipulation, the Company preserved its rights to assert all of its challenges that have been or will be made by the Company to the jury verdict and the judge’s rulingcourt’s April 2017 rulings. As a result of the stipulation, the Company recorded an additional reserve of $6.1 million in the quarter ended May 31, 2017.

The Company has not yet been rendered. Motions forfiled a motion with the court seeking judgment as a matter of law in its favor and, alternatively, a new trial have not yet beentrial. The Company also filed because noa motion to vacate the judgment has been entered.and dismiss the case for lack of venue, or in the alternative, to vacate the judgment and transfer the case to the Central District of California for a new trial. If, following resolution of all post-trialthese motions, the judgment is ultimately entered in Omega’s favor, CalAmpagainst the Company remains wholly or substantially intact, then the Company intends to pursue an appeal at the Court of Appeals for the Federal Circuit. In addition to its appeal, CalAmpThe Company is also seeking to invalidate a number of Omega’s patents in actionsproceedings filed with the U.S. Patent and Trademark Office. Notwithstanding the adverse jury verdict, the April 2017 court rulings and the May 23, 2017 stipulation, the Company continues to believe that its products do not infringe any valid claims of Omega’s patents and that Omega’s patents are not valid, and accordingly CalAmp intends to continue pursuing its judicial and administrative options.patents. While it is not feasible to predict with a high degree of certainty the outcome of this litigation, its ultimate resolution could be material to CalAmp’sthe Company’s cash flows andor results of operations. Furthermore, if an injunction is issued by the court, the Company could be prevented from manufacturing and selling a number of its products, which could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Orbcomm patent infringement claim

On April 7, 2016, a patent infringement lawsuit was filed against the Company by Orbcomm Inc. (“Orbcomm”) in the U.S. District Court for the Eastern District of Virginia. Orbcomm alleged that certain of the Company’s systems for tracking, monitoring, and controlling vehicles, machinery, and other assets infringed five patents asserted by Orbcomm. Through its suit, Orbcomm seeks compensatory damages, treble damages, and an injunction. On October 19, 2016, pursuant to the Company’s motion, filed May 27, 2016, the Court dismissed Orbcomm’s claims under one of the five patents because such patent was found to be directed at ineligible subject matter and therefore invalid under 35 U.S.C. § 101. Since then, Orbcomm has dismissed its claims under three of the four other asserted patents. Accordingly, only one of the five originally asserted patents remains at issue in the suit, U.S. Patent No. 6,611,686. Orbcomm’s damages claim on this remaining patent is approximately $3.6 million through May 31, 2017. The Company believes that its products and services do not infringe this patent and that the patent is invalid. In addition, the Company alleges that this patent is unenforceable due to inequitable conduct committed by Orbcomm when it revived the asserted patent claims in the Patent Office after they had been invalidated by another district court. In response to these allegations, Orbcomm then filed a motion to dismiss CalAmp’s inequitable conduct counterclaim and to strike CalAmp’s inequitable conduct defense. On September 9, 2016, the court denied Orbcomm’s motion to dismiss and strike. Thereafter, CalAmp filed its own patent infringement suit against Orbcomm in the U.S. District Court for the Eastern District of Virginia, asserting that Orbcomm is infringing two of CalAmp’s patents, U.S. Patent Nos. 6,151,355 and 6,850,839. At this early stage of the lawsuit, it is not feasible to predict with any certainty the outcome of this litigation, and the Company has made no accrual for this claim.

EVE battery claim

On October 27, 2014, LoJack was notified in 2013 by some of its international licensees that some of the batteries manufactured by LoJack’s former battery supplier,commenced arbitration proceedings against EVE Energy Co., Ltd. (“EVE”), and included in self-powered LoJack units these licensees had purchased from LoJack, exhibited degraded performance below LoJack’s quality standards. These notifications led LoJack to perform its own investigation. As a result of this investigation, LoJack confirmed that batteries manufactured by EVE that were included in certain self-powered LoJack units sold in the United States and to LoJack’s international licensees were exhibiting a failure to power over a period of time that could impact the ability of the LoJack unit to transmit a signal when called upon for stolen vehicle recovery. LoJack manufactures both vehicle and self-powered (battery) units and this degraded performance potentially affects only the transmit battery pack in the self-powered units. As of the date of this report, the majority of LoJack units in circulation are vehicle powered.

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

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

On October 27, 2014, LoJack and its wholly-owned subsidiary LoJack Ireland commenced arbitration proceedings against EVE by filing a notice of arbitration with a tribunal of withbefore the Hong Kong International Arbitration Centre (the “Tribunal”). The filing allegesalleged that EVE breached representations and warranties made in a supply agreementagreements with LoJack relating to the quality and performance of batteriesbattery packs supplied by EVE. On June 2, 2017, the Company was notified that the Tribunal awarded damages to LoJack (the “Damage Award”) for EVE’s breach of contract.

On June 9, 2017, LoJack entered into a settlement agreement with EVE and its controlling shareholder EVE Holdings Limited to resolve the Damage Award by having EVE Holdings Limited make payments to LoJack in the aggregate amount of approximately $46 million, which amount is net of LoJack’s attorneys’ fees and insurance subrogation payment (the “Settlement”). LoJack received approximately $12 million as of June 27, 2017 and another $3 million is scheduled to be received by June 30, 2017, which amounts are net of LoJack’s attorneys’ fees and the insurance subrogation payment. These amounts are expected to be reported as other non-operating income in the Company's consolidated statement of income for the quarter ending August 31, 2017. There are three remaining settlement installments due to be received by LoJack on October 31, 2017, February 28, 2018 and June 7, 2018 of approximately $13 million, $13 million and $5 million, respectively, all such amounts net of attorneys' fees. The Company has not yet determined the income tax effects of the Settlement, as it will depend in part on how the award is ultimately apportioned between LoJack’s domestic and international operations. The amounts to be realized by the Company pursuant to the Settlement are expected to be material to the Company's consolidated financial position and results of operations in the periods in which the Settlement installments are received and recorded.

Tracker South Africa claim

On December 9, 2016, Tracker Connect (Pty) LTD (“Tracker”), LoJack’s international licensee in South Africa, commenced arbitration proceedings against EVE were held in Hong Kong on June 6LoJack’s Irish subsidiary by filing a notice of arbitration with the International Centre for Dispute Resolution. The filing alleges breaches of the parties’ license agreement, misrepresentations, and violation of Massachusetts General Laws chapter 93A. Tracker seeks monetary damages and recovery of attorneys’ fees. On March 3, 2017, LoJack’s Irish subsidiary filed its response to 24, 2016.Tracker’s notice, denying Tracker’s allegations against LoJack, and filing counterclaims against Tracker for Tracker’s material breaches of the parties’ license agreement and bad faith conduct. The Tribunal held an additional hearing on September 15 to 16, 2016,arbitral tribunal has been selected and the Tribunal hashearing is scheduled an additional hearing for January 9 to 10, 2017, focused on damages.March 2018. The Company cannot predicthas estimated the ultimate outcome of thepotential losses from this arbitration proceedings or theproceeding and accrued a reserve in that amount of damages, if any, that the Company may be awarded by the Tribunal.during fiscal 2017.

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

LoJack Financing Recourse Agreement

LoJack’s financing recourse agreement to certain automobile dealers represents the maximum potential amount of future payments under an agreement with a certain financing company. Pursuant to the recourse agreement, the Company will reimburse participating dealers the unamortized dealer cost of LoJack units purchased by customers via auto loans underwritten by the financing company upon a borrower’s default within the initial 18 months of the auto loan. This agreement was renewed for the year ending December 31, 2016. Based on the unamortized cost of units sold and assuming the default of all borrowers, the Company’s maximum potential amount of future payments under this agreement is $4.2 million as of November 30, 2016. The expected obligation is accrued based on sales to the participating dealers and historical loss experience. As of November 30, 2016, the Company had accrued $81,000 under these guarantees. Accruals for the financing recourse agreement are recorded as a reduction of revenue in the consolidated statement of operations.

The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues, costs and expenses during the reporting periods. Actual results could differ materially from these estimates. The critical accounting policies listed below involve the Company’s more significant accounting judgments and estimates that are used in the preparation of the consolidated financial statements. These policies are described in greater detail in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) under Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended February 29, 2016,2017, as filed with the Securities and Exchange Commission on April 20, 2016,May 15, 2017, and include the following areas:

RESULTS OF OPERATIONS

OUR COMPANY

The Company is a leading provider of wireless communications products, services andInternet of Things (“IoT”) enablement solutions for a broad array of mobile and fixed applications to customers globally. The Company’s business activities are organized into our Wireless DataCom and Satellite business segments. As discussed below, the Satellite segment was shut down effective August 31, 2016.serving multiple vertical markets worldwide.

WIRELESS DATACOMRevenue

The Company’s Wireless DataCom segment offers an extensive portfolio of intelligent communications devices, a scalable cloud service platform, and targeted software applicationsRevenue decreased by $3.1 million, or 3%, to streamline otherwise complex Machine-to-Machine (M2M) and connected vehicle deployments. In March 2016, the Company completed the acquisition of LoJack. LoJack focuses on providing a differentiated range of connected vehicle solutions including the industry’s benchmark system for effective stolen vehicle recovery. CalAmp products, services and solutions enable customers to optimize their operations by collecting, monitoring and efficiently reporting business critical data and desired intelligence from high-value mobile and remote assets.

SATELLITE

Up to and including the quarter ended August 31, 2016, products of the Company's Satellite segment were sold to EchoStar, an affiliate of Dish Network, for incorporation into complete subscription Direct Broadcast Satellite (“DBS”) television systems. From fiscal 2000 through fiscal 2007, the Satellite segment represented CalAmp’s core business, reaching a concentration peak$88.1 million in fiscal 2004 when it accounted for 94% of the Company’s consolidated revenue. To diversify away from the Company’s dependence on the lower margin U.S. DBS products industry, during a 36 month period beginning in April 2004, the Company consummated six business and product line acquisitions to grow its Wireless DataCom business. As a result of these and subsequent acquisitions and organic growth in this segment, combined with a substantial decline in sales to EchoStar as a result of a DBS product performance issue in fiscal 2008, Wireless DataCom revenues surpassed Satellite revenues for the first time inquarter of fiscal 2008, and from that year through fiscal 2016 Wireless DataCom annual revenues have ranged between two and six times the amount of Satellite segment revenues, with the exception of the recession-impacted fiscal 2010.