CalAmp
Annual Report 2015

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2015 CalAmp Annual Report (Cover & Back) 2015 ANNUAL REPORT 2015 CalAmp Annual Report (Inside Spread) CalAmp is a proven leader in providing wireless communica- tions solutions to abroad array of vertical market applications and customers. The Company’s extensive portfolio of intelli- gent communications devices, robust and scalable cloud service enablement platforms, and targeted software applica- tions streamline otherwise complex machine-to-machine (M2M) deployments. These solutions enable customers to optimize their operations by collecting, monitoring and (cid:72)(cid:605)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3) (cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:16)(cid:70)(cid:85)(cid:76)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3) (cid:71)(cid:68)(cid:87)(cid:68)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:71)(cid:72)(cid:86)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3) (cid:76)(cid:81)(cid:87)(cid:72)(cid:79)(cid:79)(cid:76)- gence from high-value mobile and remote assets. CalAmp is headquartered in Oxnard, California and has been publicly traded since 1983 under the NASDAQ symbol CAMP. For more information about the Company, please visit our website at www.calamp.com. DIRECTORS, EXECUTIVE OFFICERS AND OTHER CORPORATE INFORMATION BOARD OF DIRECTORS (cid:36)(cid:17)(cid:45)(cid:17)(cid:3)(cid:522)(cid:37)(cid:72)(cid:85)(cid:87)(cid:523)(cid:3)(cid:48)(cid:82)(cid:92)(cid:72)(cid:85) Chairman of the Board (cid:36)(cid:80)(cid:68)(cid:79)(cid:3)(cid:45)(cid:82)(cid:75)(cid:81)(cid:86)(cid:82)(cid:81) Executive Chairman of the Board Business Consultant & Private Investor Auther it - Software Corporation (cid:46)(cid:76)(cid:80)(cid:69)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:36)(cid:79)(cid:72)(cid:91)(cid:92)(cid:15)(cid:3)(cid:38)(cid:41)(cid:36) Principal Alexy Capital Management (cid:48)(cid:76)(cid:70)(cid:75)(cid:68)(cid:72)(cid:79)(cid:3)(cid:37)(cid:88)(cid:85)(cid:71)(cid:76)(cid:72)(cid:78) (cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:605)(cid:70)(cid:72)(cid:85) CalAmp Corp. (cid:45)(cid:72)(cid:909)(cid:3)(cid:42)(cid:68)(cid:85)(cid:71)(cid:81)(cid:72)(cid:85) (cid:51)(cid:68)(cid:86)(cid:87)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:605)(cid:70)(cid:72)(cid:85) Windstream Holdings, Inc. (cid:55)(cid:75)(cid:82)(cid:80)(cid:68)(cid:86)(cid:3)(cid:51)(cid:68)(cid:85)(cid:71)(cid:88)(cid:81) Chairman of the Board Western Digital Corporation (cid:45)(cid:82)(cid:85)(cid:74)(cid:72)(cid:3)(cid:55)(cid:76)(cid:87)(cid:76)(cid:81)(cid:74)(cid:72)(cid:85) President, CEO and Director Silicon Graphics International Corp. (cid:47)(cid:68)(cid:85)(cid:85)(cid:92)(cid:3)(cid:58)(cid:82)(cid:79)(cid:73)(cid:72) Private Investor (cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:605)(cid:70)(cid:72)(cid:85)(cid:86) (cid:48)(cid:76)(cid:70)(cid:75)(cid:68)(cid:72)(cid:79)(cid:3)(cid:37)(cid:88)(cid:85)(cid:71)(cid:76)(cid:72)(cid:78) (cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:605)(cid:70)(cid:72)(cid:85) (cid:42)(cid:68)(cid:85)(cid:82)(cid:3)(cid:54)(cid:68)(cid:85)(cid:78)(cid:76)(cid:86)(cid:86)(cid:76)(cid:68)(cid:81) Senior Vice President, Corporate Development (cid:53)(cid:76)(cid:70)(cid:78)(cid:3)(cid:57)(cid:76)(cid:87)(cid:72)(cid:79)(cid:79)(cid:72) Executive Vice President, (cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:50)(cid:605)(cid:70)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71) Corporate Secretary (cid:918)(cid:81)(cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:68)(cid:81)(cid:87)(cid:86) SingerLewak LLP Los Angeles, CA (cid:47)(cid:72)(cid:74)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:88)(cid:81)(cid:86)(cid:72)(cid:79) Gibson, Dunn & Crutcher, LLP Los Angeles, CA (cid:55)(cid:85)(cid:68)(cid:81)(cid:86)(cid:73)(cid:72)(cid:85)(cid:3)(cid:36)(cid:74)(cid:72)(cid:81)(cid:87)(cid:3)(cid:9)(cid:3)(cid:53)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:85) American Stock Transfer and Trust Co. 6201 15th Avenue Brooklyn, NY 11219 (cid:918)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:82)(cid:85)(cid:3)(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) Addo Communications, Inc. Los Angeles, CA Forward Looking Statements: This annual report, including the Letter to Stockholders, contains forward looking statements within the meaning of the federal securities laws. Words such as “believes”, “expects”, “anticipates”, “will”, “could”, and variations of these words and similar expressions, are intended to identify securit (cid:73)(cid:82)(cid:85)(cid:90)(cid:68)(cid:85)(cid:71)(cid:3)(cid:79)(cid:82)(cid:82)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86) (cid:79)(cid:82)(cid:82)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:17)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)(cid:68)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:70)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3)(cid:71)(cid:76)(cid:909)(cid:72)(cid:85)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:87)(cid:76)(cid:70)(cid:76)(cid:83)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:90)(cid:68)(cid:85)(cid:71)(cid:3)(cid:79)(cid:82)(cid:82)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:68)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86) set forth under the heading e heading “Risk Factors” beginning of page 6 of this annual report. (cid:107)(cid:21)(cid:19)(cid:20)(cid:24)(cid:3)(cid:38)(cid:68)(cid:79)(cid:36)(cid:80)(cid:83)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:17)(cid:3)(cid:68)(cid:81)(cid:71)(cid:18)(cid:82)(cid:85)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:68)(cid:605)(cid:79)(cid:76)(cid:68)(cid:87)(cid:72)(cid:86)(cid:17)(cid:3)(cid:36)(cid:79)(cid:79)(cid:3)(cid:85) (cid:74) (cid:72)(cid:86)(cid:17)(cid:3)(cid:36)(cid:79)(cid:79)(cid:3)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:86)(cid:3)(cid:85)(cid:72)(cid:86)(cid:72)(cid:85)(cid:89)(cid:72)(cid:71)(cid:17)(cid:3)(cid:38)(cid:68)(cid:79)(cid:36)(cid:80)(cid:83)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:68)(cid:79)(cid:36)(cid:80)(cid:83)(cid:3)(cid:79)(cid:82)(cid:74)(cid:82)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:87)(cid:85)(cid:68)(cid:71)(cid:72)(cid:80)(cid:68)(cid:85)(cid:78)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:68)(cid:79)(cid:36)(cid:80)(cid:83)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:17)(cid:3)(cid:68)(cid:81)(cid:71)(cid:18)(cid:82)(cid:85)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:68)(cid:605)(cid:79)(cid:76)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71) States of America and/or other countries. Third party trademarks are the property of their respective owners. States of America and/or other countries. Third party trad Dear Fellow Shareholders: Fiscal 2015 was yet another significant milestone in CalAmp’s ongoing transformation. Not only did we reach levels of financial performance never before achieved in the history of the company, but we also made tremendous progress on expanding our serviceable market with many strategic growth initiatives. It is these new initiatives that will help our company achieve sustainable competitive advantages – and market disruption opportunities – longer term. The company has never been stronger or more relevant than it is today, with fiscal 2015 representing another waypoint on the path of intrinsic value creation for our shareholders. Our success during fiscal 2015 was driven by our Wireless Datacom segment, where demand from a broad spectrum of global customers led to solid top line growth while expanding margins produced increased bottom line profitability and operating cash flow. Despite the relatively slow start to fiscal 2015, we posted record revenues of $250.6 million, including 14% year-over-year growth in our Wireless Datacom segment. Demand for our core products and solutions remained strong, augmented by newer growth opportunities for emerging telematics applications. Throughout fiscal 2015, we also focused on expanding CalAmp’s presence on a global basis with revenue from customers outside the United States reaching $53 million, or 21% of consolidated revenues. Operationally, improving consolidated gross margins resulted in an Adjusted EBITDA Margin of 15.3% in fiscal 2015, up from 12.4% in the prior year. At the bottom line, full year non-GAAP net income per share expanded by 25% compared to last year, reaching $0.96 per diluted share. We also generated operating cash flow of $28.6 million for the year, an increase of $5.8 million or 26% compared to the prior year. Overall, the fundamentals of our business are quite sound as evidenced by these strong results. A highlight during the year was our initial success in the heavy equipment industry, an emerging area of growth for CalAmp. Midway through fiscal 2015 we began volume shipments of specialized telematics products to Caterpillar, the world’s largest heavy equipment OEM. Our customized rugged cellular and satellite communications devices are a critical component of Caterpillar’s telematics solution and are helping to provide Caterpillar and its customers with valuable insights into equipment performance throughout the product lifecycle. We remain optimistic that this and other opportunities within the heavy equipment industry will represent significant future growth drivers for CalAmp. Auto insurance telematics was another market that provided solid top line contributions for CalAmp in fiscal 2015. Subsequent to the end of the fiscal year, we completed the acquisition of Crashboxx, an early stage technology company with valuable intellectual property focused on insurance telematics applications across the entire auto insurance lifecycle, from driver risk technologies are assessment extraordinarily unique within the emerging insurance telematics marketplace, and we expect that this acquisition will help form the nexus of CalAmp’s broadening Insurance Telematics strategy going forward. We believe that the Crashboxx technology, once fully commercialized, will play a critical role in expanding our growth prospects in this enormous and largely untapped market. through claims processing automation. The Crashboxx During fiscal 2015 we benefitted from early success of a new product category for CalAmp, the MDT-7, an Android-based 7-inch mobile data terminal that complements our wide range of fleet telematics devices. To support the commercial roll-out of the MDT-7, toward the end of fiscal 2015 we launched the CalAmp private Appstore. We believe that the Appstore, along with embedded core applications on the MDT-7, will enable us to offer additional product and software content to customers within our existing verticals, and also gain access to new vertical applications through developing content partnerships. As we look ahead to fiscal 2016 and beyond, I am more optimistic than ever about the future of CalAmp. I firmly believe that our unique portfolio of hardware, software and service solutions, supported by established channel partnerships with global reach, give us the leverage to win a disproportionate share of opportunities and drive broader adoption of emerging applications in the machine-to-machine (M2M) communications market. As always, I would like to thank our employees, shareholders, partners and customers for their dedication and commitment. With their continued support, I have never been more confident in CalAmp’s ability to achieve sustainable and profitable growth well into the future. These are indeed exciting times for CalAmp. Sincerely, Michael Burdiek President & Chief Executive Officer 7 June 1 , 2015 2 Non-GAAP Reconciliations(Unaudited)"GAAP" refers to financial information presented in accordance with U.S. Generally Accepted Accounting Principles. This letter to shareholdersincludes references to "Adjusted EBITDA margin" and "non-GAAP net income per share", which are historical non-GAAP financial measures asdefined in Regulation G promulgated by the Securities and Exchange Commission. The presentation of these historical non-GAAP financialmeasures are not meant to be considered in isolation from or as a substitute for results prepared in accordance with GAAP. CalAmp uses thesenon-GAAP financial measures to enhance investors' overall understanding of the financial performance of CalAmp's business. Specifically, CalAmpbelieves that a report of Adjusted EBITDA margins and non-GAAP net income provides consistency in its financial reporting and facilitates thecomparison of results of its operations between its current and past periods.The reconciliations of GAAP-basis pretax income to Adjusted EDITDA margin and non-GAAP net income per share for the most recent two yearsare as follows ($ and share amounts in 000s):Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Margin2015201420152014GAAP basis pretax income$24,800$17,911GAAP basis pretax income$24,800$17,911Interest expense, net72 365 Amortization of intangible assets6,590 6,283 Depreciation expense2,796 1,822 Stock-based compensation expense4,100 2,924 Amortization of intangible assets6,590 6,283 Acquisition and integration expenses - 661 Stock-based compensation expense 4,100 2,924 Pretax income (non-GAAP basis) 35,490 27,779 Adjusted EBITDA$38,358$29,305Non-GAAP income tax provision (a) (328) (87)Revenue$250,606$235,903Non-GAAP net income$35,162$27,692Adjusted EBITDA Margin15.3%12.4%Non-GAAP net income per diluted share$0.96 $0.77 Weighted average common shares outstanding on diluted basis36,530 36,023 (a)The non-GAAP income tax provision represents cash taxes paid orpayable for the period after giving effect to the utilization of net operatingloss and tax credit carryforwards.Year Ended Feb. 28,Year Ended Feb. 28,Non-GAAP Net Income Per Share 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, 2015 COMMISSION FILE NUMBER: 0-12182 ________________ CALAMP CORP. (Exact name of Registrant as specified in its Charter) Delaware 95-3647070 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1401 N. Rice Avenue Oxnard, California 93030 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (805) 987-9000 ________________ SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: TITLE OF EACH CLASS NAME OF EACH EXCHANGE None None SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: $.01 par value Common Stock (Title of Class) (Name of each exchange on which registered) Nasdaq Global Select Market 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 [ ] 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 31, 2014 was approximately $672,679,000. As of April 3, 2015, there were 36,225,384 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 28, 2015 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. ITEM 1. BUSINESS OUR COMPANY PART I 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 Mobile Resource Management (MRM) applications, the broader Machine-to-Machine (M2M) communications space and other emerging markets that require connectivity anytime and 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 service 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 for energy, government, transportation and automotive vertical markets. In addition, we anticipate new opportunities and future growth for our MRM and M2M solutions in heavy equipment and various aftermarket telematics applications including insurance telematics, as well as other emerging markets and applications. Our broad portfolio of wireless communications products includes asset tracking devices, 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 both CalAmp and third party solutions worldwide and are ideal for applications demanding reliable, business-critical communications. Our MRM and M2M devices have been widely deployed with more than four million devices currently in service around the world. Our customers select our products based on optimized feature sets, configurability, manageability, long-term support, reliability and, in particular, overall value. Our deep understanding of our customers’ dynamic needs and their respective vertical markets, applications and business requirements remain key differentiators for us. In addition to our comprehensive device portfolio, we offer 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 service enablement and telematics platforms facilitate integration of our own applications, as well as those of third parties, through Application Programming Interfaces (APIs), which our partners leverage to rapidly deliver full-featured MRM and M2M solutions to their customers and markets. By leveraging comprehensive device management capabilities from our cloud-based offerings, any CalAmp device on the network can be remotely managed, configured and upgraded throughout the entire deployment lifecycle. Already integrated with numerous global Mobile Network Operator (MNO) account management systems, our proven commercial platforms were architected to leverage these carrier backend systems to provide our customers access to services that are essential for creating and supporting dynamic end-to-end solutions. Our proven, scalable and targeted SaaS offerings and related core competencies enable rapid and cost-effective deployment of high-value solutions for our customers and provide an opportunity to incrementally grow our recurring revenues. Over the last several years, we have steadily grown our base of PaaS and SaaS subscribers both organically and 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 and are otherwise difficult to manage in real time. In such situations our solutions provide clear and demonstrable ROI. Our solutions benefit our customers in the following ways: • Increasing productivity, improving communications and optimizing performance of fleets and mobile workers. Applications include tracking, dispatch and route optimization, fleet diagnostics and maintenance, work flow improvement, driver behavior monitoring and training and work-alone safety initiatives. 2 • Securing, tracking and managing financed vehicles and assets. Applications include asset tracking for sub-prime vehicle finance lenders and Buy Here Pay Here dealers, stolen vehicle recovery, dealer lot planning and management, rental equipment tracking and management and remote car start. • Enabling comprehensive tracking and management services for cargo and containers. Applications include local and long haul trailer tracking, management and logistics, container tracking and status, refrigerated container monitoring and control, and local and intermodal pallet/cargo logistics and tracking. • Providing monitoring, control and automation of remote industrial equipment and critical infrastructure. Applications include freshwater and wastewater management, irrigation system control, traffic monitoring systems, oil and gas flow, transportation and distribution, automated reading of commercial utility meters, and monitor and control of substations and other critical energy grid infrastructure. • Facilitating mission critical communication and coordination among public safety and emergency services personnel and systems. Applications include real-time, two-way data access for emergency and public safety personnel and systems, vehicle area networking and peripheral equipment communications, remote and mobile video surveillance, and computer-aided dispatch and situation monitoring. • Facilitating comprehensive monitoring, tracking and telematics for heavy equipment and commercial trucking. Applications include heavy equipment maintenance, usage optimization and tracking, rental equipment tracking and usage, yellow iron and attachment management, indoor/outdoor forklift and loader location, crash detection and telematics, and transportation regulatory compliance such as hours of service and electronic and onboard recording requirements. • Enabling usage-based insurance, enhanced claims processing and the delivery of comprehensive valued- added services for the vehicle insurance industry. Applications include driver behavior, scoring and feedback, crash detection, first notice of loss, accident damage assessment, distracted driving prevention, teen driver tracking and management, roadside assistance, and predictive maintenance. • Rapidly enabling the delivery of comprehensive managed services for machine and equipment OEMs. Applications include service, maintenance, tracking, monitoring and control for generators, turbines, compressors, small engines (outboard motors, ATVs), and power tools. • Providing reliable, easy-to-use wireless communications solutions for fixed, mobile and portable enterprise data applications. Examples include office back-up and primary backhaul, digital signage, kiosk/high-value vending and video surveillance. SATELLITE Our Satellite segment develops, manufactures and sells direct-broadcast satellite (DBS) outdoor customer premise equipment and whole home video networking devices enabling 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. For financial information about our operating segments and geographic areas, refer to Note 15 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 our 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. 3 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. We continue to increase this outsourcing effort to remain competitive on product costs. In addition, in fiscal 2014 we added a new contract manufacturer to our supply base. This enables us to dual source some product manufacturing. A substantial portion of our products, components and subassemblies are procured from foreign suppliers and contract manufacturers 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 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) according to the ISO 9001:2008 International Standard. We continually perform internal audits to ensure compliance with this quality standard. In addition, UL performs an annual external Compliance Assessment, with the next assessment scheduled for July 2015. We have maintained our ISO certification through each Compliance Assessment. Every three years, UL performs a full system Recertification Assessment. The next Recertification Assessment, which will be for ISO 9001:2014, is scheduled for July 2016. 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 and industrial monitoring and controls for mobile and fixed location IP data communication applications, tracking products and services for MRM applications, and satellite DBS products. 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 network-based asset tracking units, and 3G and 4G broadband router products for fixed and 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 2015, 2014 and 2013 were $19,854,000, $21,052,000, and $14,291,000, respectively. During this three-year period, our research and development expenses have ranged between 8% and 9% of annual consolidated revenues. SALES AND MARKETING Our revenues are derived mainly from customers in the United States, which represented 79%, 81% and 82% of consolidated revenues in fiscal 2015, 2014 and 2013, 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, Middle East and Europe. Our Satellite segment sells its products primarily to 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 headquarters in Oxnard, California. Echostar accounted for 14.9%, 20.7% and 22.1% of consolidated revenues in fiscal 2015, 2014 and 2013, respectively. 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. 4 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, 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 support to our customers. Wireless DataCom We believe that the principal competitors for our wireless products and services include Danlaw, Fleetmatics, Freewave, General Electric, GenX, Geotab, Meteorcomm, Novatel Wireless, Sierra Wireless, Spireon, Telogis, Xirgo and Zonar Systems. Satellite We believe that the principal competitors for our DBS products include Global Invacom, Microelectronics Technology, Sharp and Wistron NeWeb Corporation. Because we are typically not the sole source supplier of our DBS products, we are exposed to ongoing price and margin pressures in this business. BACKLOG Total backlog as of February 28, 2015 was $51.7 million. Substantially all of the backlog is expected to be converted to sales in fiscal 2016. INTELLECTUAL PROPERTY Patents At February 28, 2015, we had 25 U.S. patents and 6 foreign patents in our Wireless DataCom business. In addition to our awarded patents, we have 12 patent applications in process. Trademarks CalAmp and Dataradio are among the federally registered trademarks of the Company. EMPLOYEES At February 28, 2015, we had approximately 410 employees and approximately 120 contracted 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. EXECUTIVE OFFICERS The executive officers of the Company are as follows: NAME AGE POSITION Michael Burdiek Garo Sarkissian Richard Vitelle 55 48 61 President and Chief Executive Officer Senior Vice President, Corporate Development Executive Vice President, 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 5 investment partner and advisor in the private equity sector. From 1987 to 2003, Mr. Burdiek held a variety of executive management positions with Comarco, Inc., a publicly held company. Mr. Burdiek began his career as a design engineer with Hughes Aircraft Company. GARO SARKISSIAN joined the Company in 2005 and 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 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 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) 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. Materials that the Company files with the SEC may be read and copied at the SEC's Conventional and Electronic Reading Rooms at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the Conventional and Electronic Reading Rooms may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website at www.sec.gov that contains reports, proxy and information statements, and other information regarding the Company that the Company files electronically with the SEC. ITEM 1A. RISK FACTORS The following list describes several risk factors which are applicable to our Company: The Company has two significant customers, the loss of either of which could have a material adverse effect on the Company’s future sales and its ability to grow. EchoStar accounted for 15% of the Company’s consolidated revenues for fiscal 2015, and a major original equipment manufacturer in the heavy equipment industry accounted for 11% of the Company’s consolidated revenues in the fiscal 2015 fourth quarter. The loss of EchoStar or the heavy equipment OEM as a customer, a deterioration in either customer’s overall business, or a decrease in either customer’s 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 these key customers could result in write-offs or in the loss of future business and could have a material adverse effect on the Company’s business, financial condition or results of operations. 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. 6 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 market for our products is 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 will be sufficient to establish and sustain our products in the market. 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”. 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; 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. 7 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 profitability 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 fluctuates rapidly and unpredictably, it may be difficult to manage our 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 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 evolve during the downturn and demand shifts to newer products. 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, financial condition or results of operations. Because we currently sell, and we intend to grow the sales of, certain of our products in countries other than the United States, we are subject to different regulatory policies. We may not be able to develop products 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 which could adversely affect our business. 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 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. 8 Sales to customers outside the U.S. accounted for 21%, 19% and 18% of our total sales for the fiscal years ended February 28, 2015, 2014 and 2013, respectively. Assuming that we continue to sell our products 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. 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 20% 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 31 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. We rely on access to third-party patents and intellectual property, and our future results could be materially 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. We may, from time to time, also be subject to litigation over intellectual property rights or other commercial issues. 9 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 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 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. Regardless of merit, responding to such litigation can consume significant time and expense. 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 may be required to pay substantial damages. If there is a temporary or permanent injunction 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 in management’s opinion we do not have a potential liability for damages or royalties from any known current legal proceedings or claims related to the infringement of patent or other intellectual property rights that would individually or in the aggregate have a material adverse effect on our financial condition and operating results, the results of such potential claims cannot be predicted with certainty. In any potential matters related to infringement of patent or other intellectual property rights of others, or should several of these matters be resolved against us in the same reporting period, our financial condition and operating results could be materially adversely affected. Any acquisitions we pursue could disrupt our business and harm our financial condition and results of operations. As part of our business strategy, we review and intend to continue to review acquisition opportunities that we believe would be advantageous or complementary to the development of our business. In fiscal 2014, we completed our acquisition of Wireless Matrix and Radio Satellite Integrators. We may acquire additional businesses, assets, or technologies in the 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; • require a significant devotion of management’s time and resources in the pursuit or consummation of any acquisition; incur substantial debt, which may not be available to us on favorable terms and may adversely affect our liquidity; • • issue equity or equity-based securities that would dilute existing stockholders’ percentage ownership; • assume contingent liabilities; and • 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. 10 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. 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. 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 one 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. 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 depends upon Internet-based systems that are proprietary to our Company. These applications, which are hosted by an independent data center 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, 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. 11 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. 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 data centers and 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. Despite our security measures, our information technology systems may be vulnerable to attacks by hackers or other disruptive problems. Any such security breach may compromise information used or stored on our networks and may result in significant data losses or theft of our, our customers’, or our business partners’ intellectual property, proprietary business information or personally identifiable information. A cybersecurity breach could negatively affect our reputation by 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, 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 and other countries in which it operates. In the United States, the Federal Communications Commission regulates many aspects of communication devices, including radiation of electromagnetic energy, biological safety and rules for devices to be connected to the telecommunication networks. Although CalAmp has obtained the required FCC and various 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 the United States in which it currently sells its products or in which it may sell its products in the future. 12 We may be subject to product liability, warranty and recall claims that 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. 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 of operations. Reduced consumer or corporate spending due to the global economic downturn that began in 2008 and other uncertainties in the macroeconomic environment have affected and could continue to adversely affect our revenues and cash flow. We depend on demand from the consumer, original equipment manufacturer, industrial, automotive and other markets we serve for the end market applications of our products and services. Our revenues are based on certain levels of consumer and corporate spending. If the significant reductions in consumer or corporate spending as a result of uncertain conditions in the macroeconomic environment continue, our revenues, profitability and cash flow could be adversely affected. The Company’s inability to identify the origin of conflict minerals in its 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 materials 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 manufacture of products. Those rules, or similar rules that may be adopted in other jurisdictions, could adversely affect our costs, the availability of minerals used in our products and our relationships with customers and suppliers. Risks Relating to Our Common Stock and the Securities Market 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; 13 • • • • • • • • • changes in key management personnel; announcements of technological innovations or new products by us or our 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. Our stock price has been highly volatile in the past and could be highly volatile in the future. The market price of our stock can be highly volatile due to the risks and uncertainties described in this Annual Report, as well as other factors, including: • • • substantial volatility in quarterly revenues and earnings due to our current dependence on a small number of significant customers; comments by securities analysts; and our failure to meet market expectations. Over the two-year period ended February 28, 2015, the price of CalAmp common stock as reported on The NASDAQ Global Select Market ranged from a high of $34.85 to a low of $9.26. 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. 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. 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. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 14 ITEM 2. PROPERTIES Our principal facilities, all leased, are as follows: Square Footage Location Use Corporate office, Satellite offices and manufacturing facility Oxnard, California 98,000 Wireless DataCom offices Carlsbad, California 26,000 Wireless DataCom offices Irvine, California 13,000 Wireless DataCom offices Torrance, California Wireless DataCom offices Herndon, Virginia Wireless DataCom offices Chaska, Minnesota 4,000 Waseca, Minnesota 8,000 Wireless DataCom offices Auckland, New Zealand 4,000 Wireless DataCom offices 5,000 10,000 ITEM 3. LEGAL PROCEEDINGS We are not currently involved in any material pending legal proceedings. 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 consolidated financial position or results of operations. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 15 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: Fiscal Year Ended February 28, 2015 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Fiscal Year Ended February 28, 2014 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter LOW HIGH $14.74 $16.57 $15.51 $15.32 $ 9.26 $12.85 $16.45 $23.43 $34.85 $22.36 $20.84 $20.00 $13.63 $16.71 $26.35 $33.59 At April 3, 2015, the Company had approximately 1,400 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 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. 16 ITEM 6. SELECTED FINANCIAL DATA OPERATING DATA Revenues Year Ended February 28, 2015 2014 2013 2012 2011 (In thousands except per share amounts) $ 250,606 $ 235,903 $ 180,579 $ 138,728 $ 114,333 Cost of revenues 163,202 155,972 123,686 96,709 84,775 Gross profit Operating expenses: Research and development Selling General and administrative Intangible asset amortization Total operating expenses 87,404 79,931 56,893 42,019 29,558 19,854 20,442 15,578 6,590 62,464 21,052 19,837 14,416 6,283 61,588 14,291 12,725 12,154 1,743 40,913 11,328 11,060 10,984 1,277 34,649 11,125 10,503 8,858 1,132 31,618 Operating income (loss) 24,940 18,343 15,980 7,370 (2,060) Non-operating expense, net (140) (432) (532) (2,091) (1,395) Income (loss) before income taxes 24,800 17,911 15,448 5,279 (3,455) Income tax benefit (provision) (8,292) (6,108) 29,178 (61) 172 Net income (loss) $ 16,508 $ 11,803 $ 44,626 $ 5,218 $ (3,283) Earnings (loss) per share: Basic Diluted BALANCE SHEET DATA Current assets Current liabilities Working capital Current ratio Total assets Long-term debt $ 0.46 $ 0.34 $ 1.54 $ 0.19 $ (0.12) $ 0.45 $ 0.33 $ 1.49 $ 0.18 $ (0.12) February 28, 2015 2014 2013 2012 2011 (In thousands except ratio) $ 127,421 $ 92,241 $ 106,769 $ 39,789 $ 38,103 $ 47,005 $ 42,118 $ 28,949 $ 23,601 $ 32,869 $ 80,416 $ 50,123 $ 77,820 $ 16,188 $ 5,234 2.7 2.2 3.7 1.7 1.2 $ 202,617 $ 179,265 $ 150,771 $ 51,481 $ 55,485 $ - $ 702 $ 2,434 $ 1,900 $ 4,460 Stockholders' equity $ 151,385 $ 133,147 $ 117,549 $ 24,977 $ 17,602 17 Factors affecting the year-to-year comparability of the Selected Financial Data include business acquisitions and other significant events, as follows: • • 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. 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”, “will”, “could”, “plans”, “intends”, “seeks”, “believes”, “anticipates”, “expects”, “estimates”, “judgment”, “goal”, and variations of these words and similar expressions, are intended to identify forward-looking statements. These forward-looking statements reflect 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 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 (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 update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements speak only as of the date of this Annual Report on Form 10-K. Readers should carefully review the Risk Factors and the risk factors set forth in other documents we file from time to time with the SEC. Basis of Presentation 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. Under the 52-53 week method, fiscal years 2014 and 2013 ended on March 1, 2014 and March 2, 2013, respectively. This change had no effect on fiscal 2015 because the last day of the year is February 28, 2015 under both the old and the new method. The consolidated financial statements for fiscal 2015 include operations from March 2, 2014 through February 28, 2015, a period of 52 weeks. Fiscal 2014 also consisted of 52 weeks, while fiscal year 2013 consisted of 53 weeks. In these consolidated financial statements, the fiscal year end for all years is shown as February 28 for clarity of presentation. 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. WIRELESS DATACOM Our Wireless DataCom segment offers solutions for Mobile Resource Management (MRM) applications, the broader Machine-to-Machine (M2M) communications space and other emerging markets that require connectivity anytime and anywhere. Our MRM and M2M solutions enable customers to optimize their operations by collecting, monitoring and 18 efficiently reporting business-critical data and desired intelligence from high-value remote and mobile assets. Our extensive portfolio of communications devices, scalable cloud service 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 for our energy, government, transportation and automotive vertical markets. In addition, we anticipate future opportunities for adoption of our MRM products and M2M solutions in heavy equipment and various aftermarket telematics applications including insurance telematics, as well as other emerging applications and markets. SATELLITE The Company's satellite products are sold primarily to Echostar, an affiliate of Dish Network, for incorporation into complete subscription satellite television systems. 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 asset 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 has some degree of concentration, with one customer accounting for approximately 15% of the Company's fiscal 2015 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 and adversely 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. 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. 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 19 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 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 to Financial Accounting Standards Board Accounting Standards Codification (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, 2015, the Company had unrecognized tax benefits for uncertain tax positions of $1.0 million. Impairment Assessments of Goodwill, Purchased Intangible Assets and Other Long-Lived Assets At February 28, 2015, the Company had $15.5 million in goodwill, $22.6 million in other intangible assets and $10.5 million in net property and equipment and improvements on its consolidated balance sheet. The Company believes the valuation of its long-lived assets is a “critical accounting 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 2015, 2014 and 2013. 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” or “expirations”, and refers only to the unvested portion of the surrendered equity awards. 20 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 the recognition of revenue for the monitoring device products that are sold with application subscriptions because the application services are essential to the functionality of the products, and accordingly, 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 on a straight-line basis over the minimum contractual service periods of one year to three years. Revenues from renewals of data communication services after the initial one year term are recognized as application subscriptions revenue when the services are provided. When customers prepay application subscription renewals, such amounts are recorded as deferred revenues and are recognized over the renewal term. Results of Operations, Fiscal Years 2013 Through 2015 The following table sets forth, for the periods indicated, the percentage of revenues represented by items included in the Company's consolidated statements of income: Year Ended February 28, 2014 2013 2015 Revenues Cost of revenues Gross profit Operating expenses: Research and development Selling General and administrative Intangible asset amortization Operating income Non-operating expense, net Income before income taxes Income tax benefit (provision) Net income 100.0% 65.1 34.9 100.0% 66.1 33.9 100.0% 68.5 31.5 7.9 8.2 6.2 2.6 10.0 (0.1) 9.9 (3.3) 6.6% 8.9 8.4 6.1 2.7 7.8 (0.2) 7.6 (2.6) 5.0% 7.9 7.0 6.7 1.0 8.9 (0.3) 8.6 16.2 24.8% The Company's revenue, gross profit and operating income by business segment for the last three years are as follows: 21 REVENUE BY SEGMENT Year ended February 28, 2015 2014 2013 $000s $ $ 213,119 37,487 250,606 % of Total 85.0% 15.0% 100.0% $000s $ $ 187,012 48,891 235,903 % of Total 79.3% 20.7% 100.0% $000s $ $ 139,503 41,076 180,579 GROSS PROFIT BY SEGMENT Year ended February 28, 2015 2014 2013 $000s $ $ 77,899 9,505 87,404 % of Total 89.1% 10.9% 100.0% $000s $ $ 70,114 9,817 79,931 % of Total 87.7% 12.3% 100.0% $000s $ $ 50,005 6,888 56,893 OPERATING INCOME BY SEGMENT Year ended February 28, 2015 2014 2013 % of Total Revenue 9.6% 2.0% (1.6%) 10.0% % of Total Revenue 6.9% 2.4% (1.5%) 7.8% $000s $ $ 16,324 5,642 (3,623) 18,343 $000s $ $ 16,844 3,111 (3,975) 15,980 $000s $ $ 23,833 5,017 (3,910) 24,940 % of Total 77.3% 22.7% 100.0% % of Total 87.9% 12.1% 100.0% % of Total Revenue 9.4% 1.7% (2.2%) 8.9% Segment Wireless DataCom Satellite Total Segment Wireless DataCom Satellite Total Segment Wireless DataCom Satellite Corporate expenses Total 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 2015 compared to $187.0 million last year. These increases were due primarily to the revenue generated from a major original equipment manufacturer in the heavy equipment industry as it increased its purchases from us, as well as increased sales of MRM products into the UBI, fleet management and asset tracking markets and to increased demand from a key customer in the solar energy industry. Satellite revenue decreased by $11.4 million, or 23%, to $37.5 million in fiscal 2015 compared to $48.9 million last year due primarily to fluctuations in product demand and product transitions on the part of the Satellite segment’s principal customer. 22 Gross Profit and Gross Margins Wireless DataCom gross profit increased by $7.8 million to $77.9 million in fiscal 2015 from $70.1 million last year due to higher revenue as described above. Wireless DataCom gross margin decreased slightly to 36.6% in fiscal 2015 from 37.5% last year 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 last year. Satellite's gross margin increased to 25.4% in fiscal 2015 from 20.1% last year which is attributable to changes in product mix and product cost reductions. Operating Expenses Consolidated research and development (“R&D”) expense decreased to $19.9 million in fiscal 2015 from $21.1 million last year due primarily to staff reductions and the absorption of engineering time on customer product development and internal-use software projects in fiscal 2015. Consolidated selling expenses increased by $0.6 million to $20.4 million in fiscal 2015 from $19.8 million in fiscal 2014 due primarily to higher marketing-related expenses. Consolidated general and administrative expenses (“G&A”) increased by $1.2 million to $15.6 million in fiscal 2015 compared to $14.4 million in fiscal 2014 due primarily to higher legal and stock compensation expenses. Amortization of intangibles increased to $6.6 million in fiscal 2015 from $6.3 million last year due to amortization of intangible assets that arose in conjunction with the acquisition of Radio Satellite Integrators, Inc. in December 2013. Non-operating Expense, Net Non-operating expense, net decreased to $140,000 in fiscal 2015 compared to $432,000 in fiscal 2014 due primarily to higher investment income this year compared to last year and lower interest expense this year compared to last year because of the payoff of the Company’s bank term loan during the third quarter of fiscal 2014. Income Tax Provision The effective income tax rate was 33.4% in fiscal 2015 compared to 34.1% last year. The Company’s effective tax rate is lower than the combined U.S. statutory federal and state income tax rate of approximately 41% due primarily to research and development tax credits and because no foreign taxes were provided for certain foreign earnings that are sheltered by foreign net operating loss carryforwards for which no tax benefit was previously recognized. Fiscal Year 2014 compared to Fiscal Year 2013 Revenue Wireless DataCom revenue increased by $47.5 million, or 34%, to $187.0 million in fiscal 2014 compared to $139.5 million in fiscal 2013. These increases were due primarily to the revenue contribution of the Wireless Matrix business, which was acquired at the beginning of fiscal 2014, and strong demand for the Company’s MRM products on the part of fleet management and asset tracking customers. The Company’s Wireless Networks business, which comprises the remainder of the Wireless DataCom segment, benefitted from strength in the Energy vertical. Satellite revenue increased by $7.8 million, or 19%, to $48.9 million in fiscal 2014 compared to $41.1 million in fiscal 2013. These increases were due primarily to the introduction of new home networking products that were launched in fiscal 2013. Gross Profit and Gross Margins Wireless DataCom gross profit increased 40% to $70.1 million in fiscal 2014 from $50.0 million in fiscal 2013. Wireless DataCom gross margin increased to 37.5% in fiscal 2014 from 35.8% in the prior year. These improvements were 23 primarily due to higher margins for the application subscriptions revenue of Wireless Matrix compared to the rest of the Wireless DataCom revenues. Satellite gross profit increased by $2.9 million to $9.8 million in fiscal 2014 compared to $6.9 million in fiscal 2013. Satellite's gross margin increased to 20.1% in fiscal 2014 from 16.8% in the previous year. These improvements are attributable to changes in product mix and product cost reductions. Operating Expenses Consolidated research and development (“R&D”) expense increased to $21.1 million in fiscal 2014 from $14.3 million in fiscal 2013 due primarily to the Wireless Matrix acquisition, which accounted for $5.0 million of the increase. Expansion of the Company’s MRM business accounted for the remainder of the increase. Consolidated selling expenses increased by $7.1 million to $19.8 million in fiscal 2014 from $12.7 million in fiscal 2013. The Wireless Matrix acquisition accounted for $5.2 million of the increase. The MRM and Wireless Networks other businesses accounted for the remaining increases due to higher payroll expense as a result of additional sales and marketing personnel. Consolidated general and administrative expenses (“G&A”) increased by $2.2 million to $14.4 million in fiscal 2014 compared to $12.2 million in fiscal 2013. The Wireless Matrix acquisition accounted for $1.5 million of the increase. The remaining increase was attributable primarily to higher information technology expense. Amortization of intangibles increased to $6.3 million in fiscal 2014 from $1.7 million in the prior year. This increase was attributable to the Navman product line acquisition in May 2012, the Wireless Matrix acquisition in March 2013 and the Radio Satellite Integrators acquisition in December 2013. Non-operating Expense, Net Non-operating expense, net decreased by $100,000 to $432,000 in fiscal 2014 compared to $532,000 in fiscal 2013 due primarily to decreased interest expense of $80,000 on the lower outstanding balance in fiscal 2014 compared to 2013 of the note payable issued as partial consideration for the Navman product line acquisition. Income Tax Provision The effective income tax rate was 34.1% in fiscal 2014. The Company’s effective tax rate was lower than the combined U.S. statutory federal and state income tax rate of approximately 41% due primarily to research and development tax credits and because no foreign taxes were provided for certain foreign earnings that are sheltered by foreign net operating loss carryforwards for which no tax benefit was previously recognized. Liquidity and Capital Resources 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 February 28, 2015. The Company's primary sources of liquidity are its cash, cash equivalents, marketable securities and the revolving line of credit with Square 1 Bank. During the year ended February 28, 2015, cash and cash equivalents increased by $15.0 million. During this period, cash of $28.6 million was provided by operations, and cash of $8.7 million was used in investing activities, consisting of net purchases of marketable securities of $1.2 million and capital expenditures of $7.4 million. In addition, cash of $5.0 million was used in financing activities, consisting of taxes paid related to net share settlement of vested equity awards of $3.1 million and payment of the note and contingent consideration of $2.7 million, partially offset by proceeds of $0.7 million from exercise of stock options. 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. 24 Contractual Obligations Following is a summary of the Company's contractual cash obligations as of February 28, 2015 (in thousands): Future Estimated Cash Payments Due by Period Contractual Obligations 1 year 2-3 years 4-5 years More than 5 years Total Note payable to Navman $ 753 $ - $ - $ - $ 753 Operating leases Purchase obligations 1,640 44,711 3,296 - 2,393 - 7,329 44,711 - Total contractual obligations $ 47,104 $ 3,296 $ 2,393 $ - $ 52,793 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 related to the Company's Canadian subsidiary is included in accumulated other comprehensive loss in the stockholders' equity section of the consolidated balance sheet at February 28, 2015. The aggregate foreign transaction exchange rate losses included in determining income before income taxes were $53,000, $62,000 and $43,000 in fiscal 2015, 2014 and 2013, respectively. Interest Rate Risk 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, 2015. 25 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We have audited the accompanying consolidated balance sheets of CalAmp Corp. and subsidiaries (collectively, the “Company”) as of February 28, 2015 and 2014 and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended February 28, 2015. 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 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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, 2015 and 2014, and the results of its operations and its cash flows for each of the three years in the period ended February 28, 2015, in conformity with U.S. generally accepted accounting principles. 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, 2015, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated April 21, 2015 expressed an unqualified opinion on the effectiveness of the Company’s’ internal control over financial reporting. /s/ SingerLewak LLP Los Angeles, California April 21, 2015 26 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders CalAmp Corp. and Subsidiaries We have audited CalAmp Corp. and subsidiaries’ (collectively, the “Company”) internal control over financial reporting as of February 28, 2015, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. The Company’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 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 (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, 2015, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of the Company, and our report dated April 21, 2015 expressed an unqualified opinion. /s/ SingerLewak LLP Los Angeles, California April 21, 2015 27 CALAMP CORP. CONSOLIDATED BALANCE SHEETS (In thousands, except par value) Assets February 28, 2015 2014 Current assets: Cash and cash equivalents Short-term marketable securities Accounts receivable, less allowance for doubtful accounts of $673 and $761 at February 28, 2015 and 2014, respectively Inventories Deferred income tax assets Prepaid expenses and other current assets Total current assets Long-term marketable securities Property, equipment and improvements, net of accumulated depreciation and amortization Deferred income tax assets, less current portion Goodwill Other intangible assets, net Other assets Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt Accounts payable Accrued payroll and employee benefits Deferred revenue Other current liabilities Total current liabilities Long-term debt Other non-current liabilities 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; 36,225 and 35,859 shares issued and outstanding at February 28, 2015 and 2014, respectively Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Total stockholders' equity $ 34,184 10,177 $ 19,233 8,500 47,917 18,666 11,367 5,110 127,421 - 10,525 23,455 15,483 22,596 3,137 36,904 14,968 7,619 5,017 92,241 518 5,899 35,131 15,422 29,131 923 $ 202,617 $ 179,265 $ 688 24,012 5,522 10,748 6,035 47,005 - 4,227 $ 1,156 20,508 6,594 8,251 5,609 42,118 702 3,298 - - 362 207,881 (56,793) (65) 151,385 202,617 $ 359 206,154 (73,301) (65) 133,147 179,265 $ See accompanying notes to consolidated financial statements. 28 CALAMP CORP. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) Revenues : Products Application subscriptions and other services Total revenues Cost of revenues: Products Application subscriptions and other services Total cost of revenues Gross profit Operating expenses: Research and development Selling General and administrative Intangible asset amortization Total operating expenses Operating income Non-operating expense: Interest expense, net Other expense Total non-operating expense Income before income taxes Income tax benefit (provision) Net income Earnings per share: Basic Diluted Shares used in computing earnings per share: Basic Diluted Year Ended February 28, 2014 2013 2015 $ 209,895 40,711 250,606 $ 195,549 40,354 235,903 $ 163,022 17,557 180,579 144,911 18,291 163,202 139,205 16,767 155,972 113,780 9,906 123,686 87,404 79,931 56,893 19,854 20,442 15,578 6,590 62,464 24,940 (72) (68) (140) 24,800 (8,292) 21,052 19,837 14,416 6,283 61,588 18,343 (365) (67) (432) 17,911 (6,108) 14,291 12,725 12,154 1,743 40,913 15,980 (487) (45) (532) 15,448 29,178 $ 16,508 $ 11,803 $ 44,626 $ $ 0.46 0.45 $ $ 0.34 0.33 $ $ 1.54 1.49 35,784 36,530 34,969 36,023 28,886 29,982 See accompanying notes to consolidated financial statements. 29 CALAMP CORP. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (In thousands) Common Stock Share s Amount Additional Paid-in Capital Accumulate d De ficit Accumulated O the r Compre hen- sive Loss Total Stockholde rs' Equity Balances at February 28, 2012 28,722 $ 287 $ 154,485 $ (129,730) $ (65) $ 24,977 Net income Stock-based compensation expense Sale of common stock Issuance of shares for restricted stock awards Shares issued on net share settlement of equity awards and warrants Exercise of stock options and warrants 5,175 160 198 786 52 2 2 7 2,910 44,732 (2) (2,562) 2,805 Balances at February 28, 2013 35,041 350 202,368 Net income Stock-based compensation expense Issuance of shares for restricted stock awards Shares issued on net share settlement of equity awards Exercise of stock options 90 180 548 1 2 6 2,924 (1) (3,059) 3,922 Balances at February 28, 2014 35,859 359 206,154 Net income Stock-based compensation expense Issuance of shares for restricted stock awards Shares issued on net share settlement of equity awards Exercise of stock options 106 117 143 1 1 1 4,100 (1) (3,089) 717 44,626 (85,104) 11,803 (65) (73,301) 16,508 (65) 44,626 2,910 44,784 - (2,560) 2,812 117,549 11,803 2,924 - (3,057) 3,928 133,147 16,508 4,100 - (3,088) 718 Balances at February 28, 2015 36,225 $ 362 $ 207,881 $ (56,793) $ (65) $ 151,385 See accompanying notes to consolidated financial statements. 30 CALAMP CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended February 28, 2014 2013 2015 CASH FLOWS FROM OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Stock-based compensation expense Deferred tax assets, net Other Changes in operating assets and liabilities: Accounts receivable Inventories Prepaid expenses and other assets Accounts payable Accrued liabilities Deferred revenue NET CASH PROVIDED BY OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of marketable securities Proceeds from maturities of marketable securities Capital expenditures Acquisitions net of cash acquired Collections on note receivable Other NET CASH USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from public sale of common stock Net repayments of bank term loan Payment of acquisition-related note and contingent consideration Taxes paid related to net share settlement of equity awards Proceeds from exercise of stock options and warrants NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES $ 16,508 $ 11,803 $ 44,626 9,386 4,100 7,927 247 (11,058) (3,704) (2,076) 3,504 1,314 2,497 28,645 (16,304) 15,145 (7,437) - - (55) (8,651) - - (2,673) (3,088) 718 (5,043) 8,105 2,924 5,935 339 (11,401) (1,301) (594) 7,522 (1,449) 933 22,816 (9,018) - (2,133) (52,954) - (71) (64,176) - (1,800) (1,579) (3,057) 3,928 (2,508) 2,764 2,910 (29,231) 411 (4,728) (3,459) (887) 2,348 1,738 105 16,597 - - (1,852) (1,000) 462 (8) (2,398) 44,784 (1,200) (535) (2,560) 2,812 43,301 Net change in cash and cash equivalents 14,951 (43,868) 57,500 Cash and cash equivalents at beginning of year 19,233 63,101 5,601 Cash and cash equivalents at end of year $ 34,184 $ 19,233 $ 63,101 See accompanying notes to consolidated financial statements. 31 CALAMP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business CalAmp Corp. (“CalAmp” or 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 its Wireless DataCom and Satellite business segments. 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 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 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 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. Under the 52-53 week method, fiscal years 2014 and 2013 ended on March 1, 2014 and March 2, 2013, respectively. This change had no effect on fiscal 2015 because the last day of the year is February 28, 2015 under both the old and the new method. The consolidated financial statements for fiscal 2015 include operations from March 2, 2014 through February 28, 2015, a period of 52 weeks. Fiscal 2014 also consisted of 52 weeks, while fiscal year 2013 consisted of 53 weeks. In these consolidated financial statements, the fiscal year end for all years is shown as February 28 for clarity of presentation. 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, these criteria are 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 rights of return except for defective products returned during the warranty period. In the limited number of instances where customers have a right of return period, revenue is not recognized until the expiration of such period. The Company records estimated commitments related to customer incentive programs as reductions of revenues. 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 and other mobile assets via software applications hosted by the Company. The Company defers the recognition of revenue for the monitoring device products that are sold with application subscriptions because the application services are essential to the functionality of the products, and accordingly, 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 on a straight-line basis over the minimum contractual service periods of one year to three years. Revenues from renewals of data communication services after the initial one year term are recognized as application subscriptions revenue when the services are provided. When customers prepay 32 application subscription renewals, such amounts are recorded as deferred revenues and are recognized over the renewal term. 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 Cash and cash equivalents are maintained with 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 of reputable credit, and are therefore considered by management to 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. Because the Company sells into markets dominated by a few large service providers, a significant portion of consolidated revenues and consolidated accounts receivable relate to one customer of the Company's Satellite segment. This customer accounted for 14.9%, 20.7% and 22.1% of consolidated revenues in fiscal 2015, 2014 and 2013, respectively, and 12.1% and 14.6% of consolidated net accounts receivable at February 28, 2015 and 2014, respectively. One customer of the Company’s Wireless DataCom segment accounted for 14.7% of consolidated net accounts receivable at February 28, 2015. 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 59% and 65% of the Company's total inventory purchases in fiscal 2015 and 2014, respectively. As of February 28, 2015, this supplier accounted for 65% of the Company's total accounts payable. Some of the Company's components, assemblies and electronic manufacturing services are purchased from sole source suppliers. 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. 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. 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. Operating Leases Rent expense under operating leases is recognized on a straight-line basis over the lease term. The difference between recognized rent expense and the rent payment amount is recorded as an increase or decrease in deferred rent liability. 33 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 2015, 2014 and 2013. The cost of definite-lived identified intangible assets is amortized over the assets' estimated useful lives ranging from two 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. 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 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. Warranty The Company generally warrants its products against defects over periods ranging from 12 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 12 for a table of annual increases in and reductions of the warranty reserve for the last three years. 34 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 that year. Foreign Currency Translation and Accumulated Other Comprehensive Income (Loss) Account 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 there 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 aggregate foreign transaction exchange rate losses included in determining income before income taxes were $53,000, $62,000 and $43,000 in fiscal 2015, 2014 and 2013, respectively. 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 in any period must at least equal the portion of the grant-date fair value associated with equity awards that are vested as of such period-end date. As used in this context, the term “forfeitures” is distinct from “cancellations” or “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 and 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 that exists up to 12 months from the acquisition date, the Company records adjustments to the tangible and specifically identifiable intangible assets acquired and liabilities assumed with a corresponding adjustment to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired and liabilities assumed, whichever comes first, the impact of any subsequent adjustments is included in the consolidated statements of operations. 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 cost pursuant to ASC 420, “Exit or Disposal Cost 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 that 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 35 estimates being recorded to goodwill provided that such 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. Reclassifications Certain amounts in the financial statements of prior years have been reclassified to conform to the fiscal 2015 presentation, with no effect on net earnings. NOTE 2 – ACQUISITIONS 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 and gross profit performance in the aggregate estimated fair value amount of $2.1 million that is payable quarterly over two years. RSI was a privately-held provider of fleet management solutions primarily to city and county government agencies for applications involving public works, waste management, transit and public safety. Following is the purchase price allocation for RSI (in thousands): Purchase price Less cash acquired Net purchase price Fair value of net assets acquired: Current assets other than cash Customer lists Developed/core technology Other non-current assets Current liabilities Deferred tax liabilities, net $ 8,563 (382) 8,181 $ 941 3,150 1,970 10 (1,675) (1,768) Total fair value of net assets acquired Goodwill 2,628 $ 5,553 This goodwill is primarily attributable to the benefit of having an assembled workforce to address the Company’s governmental markets and the value that the Company expected to derive 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. 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 net 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. 36 Following is the purchase price allocation for Wireless Matrix (in thousands): Purchase price Less cash acquired Net cash paid Fair value of net assets acquired: Current assets other than cash Deferred tax assets, net Property and equipment Customer lists Developed/core technology Other non-current assets Current liabilities $ 52,986 (6,149) 46,837 $ 6,353 9,437 1,683 14,440 11,180 144 (5,218) Total fair value of net assets acquired Goodwill 38,019 $ 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 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. Following is unaudited supplemental pro forma information for fiscal 2013 presented as if the acquisition had occurred on March 1, 2012 (in thousands): Consolidated revenues Consolidated net income $ 208,219 $ 37,467 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 the year ended February 28, 2013. In addition, the pro forma financial information does not attempt to project the future results of operations of the combined company. The pro forma adjustments for the year ended February 28, 2013 consisted of adding Wireless Matrix's results of operations for the 12-month periods ended January 31, 2013 to the Company’s reported financial results for such year. The pro forma net income above includes additional amortization expense of $4,751,000 related to the fair value of identifiable intangible assets arising from the purchase price allocation. In addition, the number of shares used in computing pro forma earnings per share includes 5,175,000 common stock shares issued in February 2013 to fund the acquisition of Wireless Matrix, as if such shares were outstanding during the entire year ended February 28, 2013. Navman Supply Agreement and acquisition On May 7, 2012, the Company entered into a five-year supply agreement (the “Supply Agreement”) to provide at least $25 million of fleet tracking products to Navman Wireless, a privately held company (“Navman”). In addition, the Company concurrently entered into a product line acquisition agreement with Navman (the “Asset Purchase Agreement”) and established a research and development center in Auckland, New Zealand with an initial staff of 14 employees who transferred from Navman’s workforce. 37 The purchase price for the products and technologies acquired 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 payable with a present value of $3,080,000 at the time of issuance, and the fair value of estimated contingent royalties consideration of $822,000 for 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 payable in the form of a 15% rebate on certain products sold by the Company to Navman under the Supply Agreement. Following is the purchase price allocation for the Navman Asset Purchase Agreement (in thousands): Purchase price Fair value of net assets acquired: Property and equipment Supply contract Developed/core technology Customer lists Covenants not to compete Assumed liabilities $ 4,902 $ 200 2,220 500 710 170 (10) Total fair value of net assets acquired Goodwill 3,790 $ 1,112 This goodwill is primarily attributable to the benefit of having an assembled workforce in New Zealand and the value that the Company expects to receive from the Supply Agreement beyond its five year term. The goodwill arising from this acquisition is deductible for income tax purposes. NOTE 3 – FINANCIAL INSTRUMENTS Cash, Cash Equivalents and Marketable Securities The following table summarizes the Company’s cash and marketable securities as of February 28, 2015 using the hierarchy described in Note 1 under the heading “Fair Value Measurements” (in thousands): Adjusted Cost $ 11,384 Unrealized Gains (Losses) $ - Fair Value $ 11,384 Balance Sheet Classification of Fair Value Cash and Cash Equivalents $ 11,384 Short-Term Marketable Securities $ - 400 22,400 10,184 - - (7) 400 400 - 22,400 10,177 22,400 - - 10,177 Cash Level 1: Commercial paper Level 2: Repurchase agreements Commercial paper Total $ 44,368 $ (7) $ 44,361 $ 34,184 $ 10,177 38 NOTE 4 – INVENTORIES Inventories consist of the following (in thousands): February 28, 2015 2014 Raw materials Work in process Finished goods $ $ 14,519 361 3,786 18,666 12,410 380 2,178 14,968 $ $ NOTE 5 – PROPERTY, EQUIPMENT AND IMPROVEMENTS Property, equipment and improvements consist of the following (in thousands): February 28, 2015 2014 Leasehold improvements Plant equipment and tooling Office equipment, computers and furniture Software Less accumulated depreciation and amortization $ $ 1,833 13,355 8,075 7,439 30,702 (20,177) 10,525 1,940 12,893 4,594 4,288 23,715 (17,816) 5,899 $ $ NOTE 6 – GOODWILL AND OTHER INTANGIBLE ASSETS Changes in goodwill are as follows (in thousands): Year Ended February 28, 2015 2014 Balance at beginning of year Wireless Matrix acquisition Radio Satellite Integrators acquisition Purchase price allocation adjustments Balance at end of year $ $ 15,422 - - 61 15,483 1,112 8,818 5,492 - 15,422 $ $ All goodwill is associated with the Company’s Wireless DataCom segment. Other intangible assets are comprised as follows (in thousands): February 28, 2015 February 28, 2014 Amortiz ation Pe riod Gross Carrying Amount Accumulated Amortiz ation Ne t Gross Carrying Amount Accumulated Amortiz ation Ne t Supply contract 5 years $ 2,220 $ 1,247 $ 973 $ 2,220 $ 803 $ 1,417 Developed/core technology 2-7 years T radename Customer lists 7 years 5-7 years Covenants not to compete 5 years Patents 5 years 16,151 2,130 19,438 262 176 7,126 1,217 7,949 187 55 9,025 913 11,489 75 121 16,151 2,130 19,438 262 121 4,886 913 4,394 153 42 11,265 1,217 15,044 109 79 $ 40,377 $ 17,781 $ 22,596 $ 40,322 $ 11,191 $ 29,131 39 Amortization expense of intangible assets was $6,590,000, $6,283,000 and $1,743,000 for the years ended February 28, 2015, 2014 and 2013, 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 2016 2017 2018 2019 2020 $ 6,532 6,532 6,079 2,733 720 $ 22,596 NOTE 7 – FINANCING ARRANGEMENTS AND CONTRACTUAL CASH OBLIGATIONS 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 February 28, 2015 or February 28, 2014. 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 February 28, 2015, 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. Long-Term Debt Long-term debt is comprised of the following (in thousands): Note payable to Navman, net of unamortized discount Less portion due within one year Long-term debt February 28, 2015 $ 688 (688) February 28, 2014 $ 1,858 (1,156) $ - $ 702 The Navman Wireless (Navman) note is payable in the form of a 15% rebate on certain products sold by CalAmp to Navman under a five-year $25 million supply agreement (the Supply Agreement) that was entered into in May 2012 in conjunction with CalAmp’s purchase of a product line from Navman. The unpaid balance of the Navman note would become immediately due and payable upon any termination of the Supply Agreement by the Company before the end of its five-year term (other than as a result of an uncured breach of the Supply Agreement by Navman), except that in the case of such acceleration the note balance would be subordinated to the Company’s bank debt pursuant 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. The Company made note principal payments of $1,404,000 and $1,308,000 in fiscal 2015 and 2014, respectively. 40 Other Non-Current Liabilities Other non-current liabilities consist of the following (in thousands): Deferred revenue Acquisition-related contingent consideration Deferred compensation Deferred rent February 28, 2015 $ February 28, 2014 $ 1,652 - 2,246 329 4,227 1,977 1,092 131 98 3,298 $ $ In August 2013, the Company adopted a non-qualified deferred compensation plan in which the executive officers and certain other management employees are eligible to participate whereby such participants may defer a portion of their annual base and/or variable compensation until retirement or a date specified by each participant in accordance with the plan. Effective July 1, 2014, the plan was amended to include restricted stock units as a deferrable form of compensation and to allow non-employee directors to participate in the plan. The Company is informally funding the deferred compensation plan obligations by making cash deposits to a Rabbi Trust that are invested in mutual funds in generally the same proportion as the investment elections made by the participants for their compensation deferrals. Rabbi Trust assets and deferred compensation plan liabilities as of February 28, 2015 were approximately $2,222,000 and $2,246,000, respectively, and are included in other assets and other non-current liabilities, respectively, in the accompanying consolidated balance sheet at that date. Contractual Cash Obligations Following is a summary of the Company's contractual cash obligations as of February 28, 2015 (in thousands): Future Estimated Cash Payments Due by Fiscal Year Contractual Obligations 2016 2017 2018 2019 2020 Total Note payable to Navman $ 753 $ - $ - $ - $ - $ 753 Operating leases Purchase obligations 1,640 44,711 1,732 - 1,564 - 1,513 - 880 - 7,329 44,711 Total contractual obligations $ 47,104 $ 1,732 $ 1,564 $ 1,513 $ 880 $ 52,793 Purchase obligations consist primarily of inventory purchase commitments. Rent expense under operating leases was $2,146,000, $1,886,000 and $1,707,000 in fiscal years 2015, 2014 and 2013, respectively. NOTE 8 – INCOME TAXES The Company's income before income taxes consists of the following (in thousands): Year Ended February 28, 2014 2013 2015 $ $ 24,684 116 24,800 $ $ 17,185 726 17,911 Domestic Foreign Total income before income taxes 41 $ $ 14,811 637 15,448 The income tax benefit (provision) consists of the following (in thousands): Current: Federal State Foreign Total current Deferred: Federal State Total deferred Year Ended February 28, 2014 2013 2015 $ - (325) (49) (374) $ - (42) (45) (87) (8,134) 216 (7,918) (6,346) 325 (6,021) $ - (9) (44) (53) 21,465 7,766 29,231 Total income tax benefit (provision) $ (8,292) $ (6,108) $ 29,178 Differences between the income tax benefit (provision) reported in the consolidated statements of 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, 2014 2013 2015 Income tax provision at U.S. statutory federal rate of 35% State income tax provision, net of federal income tax effect Foreign taxes Valuation allowance reductions (increases) Research and development tax credits Other, net Total income tax benefit (provision) $ $ $ (8,680) (867) 41 250 1,556 (592) (8,292) (6,269) (770) 209 (865) 1,126 461 (6,108) (5,407) (570) 178 35,148 721 (892) 29,178 $ $ $ The components of net deferred income tax assets for U.S. income tax purposes are as follows (in thousands): February 28, 2015 2014 $ $ Net operating loss carryforwards Depreciation, amortization and impairments Research and development credits Stock-based compensation Capital loss carryforward Other tax credits Inventory reserve Warranty reserve Payroll and employee benefit accruals Allowance for doubtful accounts Other accrued liabilities Other, net Gross deferred tax assets Valuation allowance Net deferred tax assets Less current portion Non-current portion 20,318 1,785 8,738 1,869 - 635 484 697 1,797 258 2,158 242 38,981 (4,159) 34,822 11,367 23,455 31,546 1,332 7,238 1,639 840 551 576 593 1,185 298 1,568 233 47,599 (4,849) 42,750 7,619 35,131 $ $ 42 The Company also has deferred tax assets for Canadian income tax purposes amounting to $4.3 million at February 28, 2015 which relate primarily to research and development expenses and non-capital loss carryforwards. The Company has provided a 100% valuation allowance against these Canadian deferred tax assets. During fiscal 2013, the Company reversed a portion of its deferred tax asset valuation allowance corresponding to the amount of net operating loss carryforwards (NOLs) utilized to offset taxable income in that year. In addition, pursuant to the fiscal 2013 evaluation of the future utilizability of deferred tax assets, the Company reversed a substantial portion of the remaining valuation allowance at the end of fiscal 2013, resulting in an income tax benefit of $29.2 million for the year. 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, 2015, the Company had NOLs of approximately $74 million and $79 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. As of February 28, 2015, the Company had research and development (R&D) tax credit carryforwards of $6.1 million and $5.6 million for federal and state income tax purposes, respectively. The federal R&D credits expire at various dates through 2035. A substantial portion of the state R&D tax credits have no expiration date. As described further in Note 9, the Company has 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 $6.5 million and $12.8 million in fiscal 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. In 2007, the Company adopted 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 R&D tax credits of $1.0 million at February 28, 2015 for which the Company has not yet recognized an income tax benefit for financial reporting purposes. Activity in the amount of unrecognized tax benefits for uncertain tax positions during the past three years is as follows (in thousands): Balance at February 28, 2012 Decrease in fiscal 2013 Balance at February 28, 2013 Decrease in fiscal 2014 Balance at February 28, 2014 Decrease in fiscal 2015 Balance at February 28, 2015 $ $ $ 1,091 (2) 1,089 (60) 1,029 - 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 2010 and earlier are not subject to examination by U.S. federal and state tax authorities. Certain income tax returns for fiscal years 2011 through 2014 remain open to examination by U.S. federal and state tax authorities. Income tax returns for fiscal years 2011 through 2014 remain open to examination by tax authorities in Canada. The Company believes that it has made adequate provision for all income tax uncertainties pertaining to these open tax years. 43 NOTE 9 – 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), which was adopted on July 30, 2004 and was amended effective June 16, 2014, various types of equity awards can be made, including stock options, stock appreciation rights, restricted stock, restricted stock units (RSUs), phantom stock and bonus stock. To date, stock options, restricted stock, 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. All 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. 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. Annual 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. The following table summarizes stock option activity for fiscal years 2015, 2014 and 2013 (options in thousands): Outstanding at February 28, 2012 Granted Exercised Forfeited or expired Outstanding at February 28, 2013 Granted Exercised Forfeited or expired Outstanding at February 28, 2014 Granted Exercised Forfeited or expired Outstanding at February 28, 2015 Number of Options Weighted Average Exercise Price 2,163 84 (466) (125) 1,656 56 (611) (8) 1,093 61 (143) (4) 1,007 4.78 7.01 2.78 3.90 5.53 15.14 7.28 4.53 5.04 $ 17.47 5.01 6.88 5.80 $ Exercisable at February 28, 2015 834 $ 4.51 44 The weighted average fair value for stock options granted in fiscal years 2015, 2014 and 2013 was $11.02, $9.43 and $4.41, respectively. The fair value of options at the grant date was determined using the Black-Scholes option pricing model with the following assumptions: Black-Scholes Valuation Assumptions Expected life (years) (1) Expected volatility (2) Risk-free interest rates (3) Expected dividend yield Year Ended February 28, 2014 2013 6 69% 1.7% 0% 6 63% 0.8% 0% 2015 6 70% 1.9% 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 remaining contractual term and the aggregate intrinsic value of outstanding options as of February 28, 2015 was 4.6 years and $13.5 million, respectively. The weighted average remaining contractual term and the aggregate intrinsic value of exercisable options as of February 28, 2015 was 3.9 years and $12.2 million, respectively. 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. During the year ended February 28, 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. Changes in the Company's outstanding restricted stock shares and RSUs during fiscal years 2015, 2014 and 2013 were as follows (shares and RSUs in thousands): Outstanding at February 28, 2012 Granted Vested Forfeited Outstanding at February 28, 2013 Granted Vested Forfeited Outstanding at February 28, 2014 Granted Vested Forfeited Outstanding at February 28, 2015 Number of Restricted Shares and RSUs Weighted Average Grant Date Fair Value 1,929 440 (916) (115) 1,338 312 (592) (34) 1,024 365 (471) (32) 886 2.71 7.50 2.53 2.85 4.40 15.58 3.83 7.88 8.02 $ 17.92 6.28 11.69 12.90 $ The Company retained 175,176 shares, 203,383 shares and 308,898 shares of the vested restricted stock and RSUs to cover the minimum required statutory amount of withholding taxes in fiscal 2015, 2014 and 2013, respectively. 45 Stock-based compensation expense for the years ended February 28, 2015, 2014 and 2013 is included in the following captions of the consolidated statements of income (in thousands): Year Ended February 28, 2015 2014 2013 Cost of revenues $ 241 $ 191 $ 136 Research and development Selling General and administrative 613 591 2,655 516 360 1,857 450 252 2,072 $ 4,100 $ 2,924 $ 2,910 As of February 28, 2015, there was $10.0 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, 2015, there were 2,433,026 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 $718,000 in fiscal 2015 and $3,928,000 in fiscal 2014. The aggregate fair value of options exercised and vested restricted stock and RSU awards as of the exercise date or vesting date was $9,900,000 for fiscal 2015 and $17,532,000 for fiscal 2014. In connection with these option exercises and vested restricted stock and RSU awards, the excess stock compensation tax deductions were $6,515,000 for fiscal 2015 and $12,781,000 for fiscal 2014. The Company has elected a policy of applying the “with-and-without” approach to determine the realized tax benefits for financial reporting purposes. Under this policy, none of the current year excess deductions are deemed to reduce regular taxes payable because the Company’s NOL carryforwards are 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 and RSU awards. The excess tax deductions 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. NOTE 10 – 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 computation of basic and diluted earnings per share (in thousands): Year Ended February 28, 2014 2013 2015 Basic weighted average number of common shares outstanding Effect of stock options, restricted stock and restricted stock units computed on treasury stock method Diluted weighted average number of common shares outstanding 35,784 34,969 28,886 746 1,054 1,096 36,530 36,023 29,982 Shares subject to anti-dilutive stock options and restricted stock-based awards excluded from calculation (in 000s) 159 57 322 46 NOTE 11 – 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 respective countries are eligible to participate. The Company may make matching contributions to the 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 $1,059,000, $733,000 and $355,000 in fiscal years 2015, 2014 and 2013, respectively. NOTE 12 – OTHER FINANCIAL INFORMATION Supplemental Cash Flow Information “Net cash provided by operating 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, 2014 2013 2015 Interest expense paid Income tax paid $ 12 $ 117 $ 127 $ 347 $ 35 $ 156 Following is the supplemental schedule of non-cash investing and financing activities (in thousands): Acquisition of Radio Satellite Integrators on December 18, 2013: Accrued liability for earn-out consideration $ - $ 2,063 Valuation and Qualifying Accounts Year Ended February 28, 2015 2014 Following is the Company's schedule of valuation and qualifying accounts for the last three years (in thousands): Balance at beginning of year Charged (credited) to costs and expenses Deductions Balance at end of year $ 254 $ 241 $ (34) $ 461 461 761 353 188 (53) (276) 761 673 $ 994 $ 910 $ (576) $ 1,328 1,328 1,516 881 1,333 (693) (1,030) 1,516 1,819 Allowance for doubtful accounts: Fiscal 2013 Fiscal 2014 Fiscal 2015 Warranty reserve: Fiscal 2013 Fiscal 2014 Fiscal 2015 Deferred tax assets valuation allowance: Fiscal 2013 Fiscal 2014 Fiscal 2015 $ 39,054 $ (35,095) $ - $ 3,959 3,959 4,849 890 150 - (840) 4,849 4,159 47 NOTE 13 – 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, Virginia 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 7. 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. NOTE 14 – LEGAL PROCEEDINGS In December 2013, a patent infringement lawsuit was filed against the Company. The lawsuit contends that certain of the Company’s vehicle tracking products infringe on the patents held by the plaintiff and seeks injunctive and monetary relief. The Company believes that it has various offensive claims against the plaintiff, and intends to vigorously defend against this action. While the outcome of this matter is currently not determinable, management does not expect that the ultimate cost to resolve this matter will have a material adverse effect on the Company’s consolidated financial position or results of operations. The Company’s assessment of materiality may change in the future based upon the availability of discovery and further developments in any matters. No loss accrual has been made in the accompanying consolidated financial statements for this matter. 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's consolidated financial position or results of operations. NOTE 15 – SEGMENT AND GEOGRAPHIC DATA Information by business segment is as follows (in thousands, except percentages): Year ended February 28, 2015 Year ended February 28, 2014 Operating Segments Operating Segments Wireless DataCom Satellite Corporate Expenses Total Wireless DataCom Satellite Corporate Expenses Total Revenues Gross profit Gross margin $ 213,119 $ 37,487 $ 250,606 $ 187,012 $ 48,891 $ 77,899 $ 9,505 $ 87,404 $ 70,114 $ 9,817 36.6% 25.4% 34.9% 37.5% 20.1% $ 235,903 $ 79,931 33.9% Operating income $ 23,833 $ 5,017 $ (3,910) $ 24,940 $ 16,324 $ 5,642 $ (3,623) $ 18,343 Year ended February 28, 2013 Operating Segments Wireless DataCom Satellite Corporate Expenses Total Revenues Gross profit Gross margin $ 139,503 $ 41,076 $ 50,005 $ 6,888 35.8% 16.8% $ 180,579 $ 56,893 31.5% Operating income $ 16,844 $ 3,111 $ (3,975) $ 15,980 48 The Company considers operating income to be a primary measure of operating performance of its business segments. The amount shown for each period in the “Corporate Expenses” column above consists of expenses that are not allocated to the business segments. These non-allocated corporate expenses include salaries and benefits of certain corporate staff and expenses such as audit fees, investor relations, stock listing fees, director and officer liability insurance, and director fees and expenses. 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's revenues were derived mainly from customers in the United States, which represented 79%, 81%, and 82% of consolidated revenues in fiscal 2015, 2014 and 2013, respectively. No single foreign country accounted for more than 6% of the Company's revenue in fiscal 2015, 2014 or 2013. NOTE 16 – QUARTERLY FINANCIAL INFORMATION (UNAUDITED) The following summarizes certain quarterly statement of operations data for each of the quarters in fiscal 2015 and 2014 (in thousands, except percentages and per share data): Firs t Quarter S econd Quarter Revenues Gros s profit Gros s margin Net income Earnings per diluted s hare $ 58,981 20,219 34.3% 2,693 0.07 $ 59,210 20,496 34.6% 3,278 0.09 Firs t Quarter S econd Quarter Revenues Gros s profit Gros s margin Net income Earnings per diluted s hare $ 53,746 18,481 34.4% 1,685 0.05 $ 58,807 19,839 33.7% 2,844 0.08 Fis cal 2015 Third Quarter $ 63,225 22,104 35.0% 4,021 0.11 Fis cal 2014 Third Quarter $ 63,503 20,995 33.1% 4,207 0.12 Fourth Quarter Total $ 69,190 24,585 35.5% 6,516 0.18 $ 250,606 87,404 34.9% 16,508 0.45 Fourth Quarter Total $ 59,847 20,616 34.4% 3,067 0.08 $ 235,903 79,931 33.9% 11,803 0.33 49 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 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)) as of February 28, 2015, 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. 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, 2015. 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. Based on its assessment, management of the Company has concluded that as of February 28, 2015 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, 2015 has been audited by SingerLewak LLP, an independent registered public accounting firm, as stated in their report which is included in Part II, Item 8 of this Annual Report. 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 2015 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. ITEM 9B. OTHER INFORMATION Compensatory Arrangements of Executive Officers On February 25, 2015, 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 2016 executive officer incentive compensation plan. The individuals covered by the fiscal 2016 executive officer incentive compensation plan are: • Michael Burdiek President and Chief Executive Officer • • Garo Sarkissian Senior Vice President, Corporate Development Richard Vitelle Executive Vice President, CFO and Secretary/Treasurer 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 65% and 110%, respectively, of his annual salary. Mr. Sarkissian is eligible for target and maximum bonuses of up to 50% and 100%, 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 and amortization (EBITDA) for fiscal 2016. 50 PART III 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 28, 2015 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. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item will be set forth under the caption “Executive Compensation” in the Company's definitive proxy statement for the Annual Meeting of Stockholders to be held on July 28, 2015 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” in the Company's definitive proxy statement for the Annual Meeting of Stockholders to be held on July 28, 2015 and is incorporated herein by this reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information contained under the captions “Certain Relationships and Related Transactions” and “Director Independence” in the Company's definitive proxy statement for the Annual Meeting of Stockholders to be held on July 28, 2015 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 Public Accountants” in the Company's definitive proxy statement for the Annual Meeting of Stockholders to be held on July 28, 2015 and is incorporated herein by reference. 51 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) The following documents are filed as part of this Report: 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 Firm 26-27 Consolidated Balance Sheets 28 Consolidated Statements of Income 29 Consolidated Statements of Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements 2. Financial Statements Schedules: 30 31 32 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 Exhibits required to be filed as part of this report are: Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company's Report on Form 10-Q for the period ended August 31, 2014). 3.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2 of the Company's Report on Form 10-Q for the period ended August 31, 2014). 10. Material Contracts: (i) Other than Compensatory Plan or Arrangements: 10.1 Building 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) . 10.2 First 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). 10.3 Form 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). 52 10.4 Loan 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). 10.5 Amendment 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). 10.6 Amendment 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). 10.7 Amendment 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). 10.8 Amendment 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). (ii) Compensatory Plans or Arrangements required to be filed as Exhibits to this Report pursuant to Item 15 (b) of this Report: 10.9 CalAmp Corp. 2004 Incentive Stock Plan as amended and Restated (incorporated by reference to Exhibit A of the Company's Definitive Proxy Statement filed on June 16, 2014). 10.10 Employment 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). 10.11 Employment 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). 10.12 Employment 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). 10.13 Form of amendment to executive 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). 10.14 Amendments 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). 21 Subsidiaries of the Registrant. 23.1 Consent of Independent Registered Public Accounting Firm. 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101 Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of February 28, 2015 and 2014, (ii) Consolidated Statements of Income and Comprehensive Income for the years ended February 28, 2015, 2014 and 2013, (iii) Consolidated Statement of Stockholders’ Equity for the years ended February 28, 2015, 2014 and 2013, (iv) Consolidated Statements of Cash Flows for the years ended February 28, 2015, 2014 and 2013, and (v) Notes to Consolidated Financial Statements. 53 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 21, 2015. 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. Signature Title Date /s/ A.J. Moyer Chairman of the Board of Directors A.J. Moyer April 21, 2015 /s/ Kimberly Alexy Director Kimberly Alexy April 21, 2015 /s/ Jeffery Gardner Director Jeffery Gardner April 21, 2015 /s/ Amal Johnson Director Amal Johnson April 21, 2015 /s/ Thomas Pardun Director Thomas Pardun April 21, 2015 /s/ Larry Wolfe Director Larry Wolfe April 21, 2015 /s/ Michael Burdiek President, Chief Executive Officer and Michael Burdiek Director (principal executive officer) April 21, 2015 /s/ Richard Vitelle Richard Vitelle Treasurer (principal accounting and Executive Vice President, CFO and Secretary/ financial officer) April 21, 2015 54 2015 CalAmp Annual Report (Inside Spread) CalAmp is a proven leader in providing wireless communica- tions solutions to abroad array of vertical market applications and customers. The Company’s extensive portfolio of intelli- gent communications devices, robust and scalable cloud service enablement platforms, and targeted software applica- tions streamline otherwise complex machine-to-machine (M2M) deployments. These solutions enable customers to optimize their operations by collecting, monitoring and (cid:72)(cid:605)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3) (cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:16)(cid:70)(cid:85)(cid:76)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3) (cid:71)(cid:68)(cid:87)(cid:68)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:71)(cid:72)(cid:86)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3) (cid:76)(cid:81)(cid:87)(cid:72)(cid:79)(cid:79)(cid:76)- gence from high-value mobile and remote assets. CalAmp is headquartered in Oxnard, California and has been publicly traded since 1983 under the NASDAQ symbol CAMP. For more information about the Company, please visit our website at www.calamp.com. DIRECTORS, EXECUTIVE OFFICERS AND OTHER CORPORATE INFORMATION BOARD OF DIRECTORS (cid:36)(cid:17)(cid:45)(cid:17)(cid:3)(cid:522)(cid:37)(cid:72)(cid:85)(cid:87)(cid:523)(cid:3)(cid:48)(cid:82)(cid:92)(cid:72)(cid:85) Chairman of the Board Business Consultant & Private Investor (cid:36)(cid:80)(cid:68)(cid:79)(cid:3)(cid:45)(cid:82)(cid:75)(cid:81)(cid:86)(cid:82)(cid:81) Executive Chairman of the Board Auther it - Software Corporation (cid:46)(cid:76)(cid:80)(cid:69)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:36)(cid:79)(cid:72)(cid:91)(cid:92)(cid:15)(cid:3)(cid:38)(cid:41)(cid:36) Principal Alexy Capital Management (cid:48)(cid:76)(cid:70)(cid:75)(cid:68)(cid:72)(cid:79)(cid:3)(cid:37)(cid:88)(cid:85)(cid:71)(cid:76)(cid:72)(cid:78) (cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:605)(cid:70)(cid:72)(cid:85) CalAmp Corp. (cid:45)(cid:72)(cid:909)(cid:3)(cid:42)(cid:68)(cid:85)(cid:71)(cid:81)(cid:72)(cid:85) (cid:51)(cid:68)(cid:86)(cid:87)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:605)(cid:70)(cid:72)(cid:85) Windstream Holdings, Inc. (cid:55)(cid:75)(cid:82)(cid:80)(cid:68)(cid:86)(cid:3)(cid:51)(cid:68)(cid:85)(cid:71)(cid:88)(cid:81) Chairman of the Board Western Digital Corporation (cid:45)(cid:82)(cid:85)(cid:74)(cid:72)(cid:3)(cid:55)(cid:76)(cid:87)(cid:76)(cid:81)(cid:74)(cid:72)(cid:85) President, CEO and Director Silicon Graphics International Corp. (cid:47)(cid:68)(cid:85)(cid:85)(cid:92)(cid:3)(cid:58)(cid:82)(cid:79)(cid:73)(cid:72) Private Investor (cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:605)(cid:70)(cid:72)(cid:85)(cid:86) (cid:48)(cid:76)(cid:70)(cid:75)(cid:68)(cid:72)(cid:79)(cid:3)(cid:37)(cid:88)(cid:85)(cid:71)(cid:76)(cid:72)(cid:78) (cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:605)(cid:70)(cid:72)(cid:85) (cid:42)(cid:68)(cid:85)(cid:82)(cid:3)(cid:54)(cid:68)(cid:85)(cid:78)(cid:76)(cid:86)(cid:86)(cid:76)(cid:68)(cid:81) Senior Vice President, Corporate Development (cid:53)(cid:76)(cid:70)(cid:78)(cid:3)(cid:57)(cid:76)(cid:87)(cid:72)(cid:79)(cid:79)(cid:72) Executive Vice President, (cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:50)(cid:605)(cid:70)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71) Corporate Secretary (cid:918)(cid:81)(cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:68)(cid:81)(cid:87)(cid:86) SingerLewak LLP Los Angeles, CA (cid:47)(cid:72)(cid:74)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:88)(cid:81)(cid:86)(cid:72)(cid:79) Gibson, Dunn & Crutcher, LLP Los Angeles, CA (cid:55)(cid:85)(cid:68)(cid:81)(cid:86)(cid:73)(cid:72)(cid:85)(cid:3)(cid:36)(cid:74)(cid:72)(cid:81)(cid:87)(cid:3)(cid:9)(cid:3)(cid:53)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:85) American Stock Transfer and Trust Co. 6201 15th Avenue Brooklyn, NY 11219 (cid:918)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:82)(cid:85)(cid:3)(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) Addo Communications, Inc. Los Angeles, CA Forward Looking Statements: This annual report, including the Letter to Stockholders, contains forward looking statements within the meaning of the federal securities laws. Words such as “believes”, “expects”, “anticipates”, “will”, “could”, and variations of these words and similar expressions, are intended to identify securit (cid:73)(cid:82)(cid:85)(cid:90)(cid:68)(cid:85)(cid:71)(cid:3)(cid:79)(cid:82)(cid:82)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86) set forth under the heading (cid:79)(cid:82)(cid:82)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:17)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)(cid:68)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:70)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3)(cid:71)(cid:76)(cid:909)(cid:72)(cid:85)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:87)(cid:76)(cid:70)(cid:76)(cid:83)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:90)(cid:68)(cid:85)(cid:71)(cid:3)(cid:79)(cid:82)(cid:82)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:68)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86) e heading “Risk Factors” beginning of page 6 of this annual report. 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(cid:72)(cid:86)(cid:17)(cid:3)(cid:36)(cid:79)(cid:79)(cid:3)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:86)(cid:3)(cid:85)(cid:72)(cid:86)(cid:72)(cid:85)(cid:89)(cid:72)(cid:71)(cid:17)(cid:3)(cid:38)(cid:68)(cid:79)(cid:36)(cid:80)(cid:83)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:68)(cid:79)(cid:36)(cid:80)(cid:83)(cid:3)(cid:79)(cid:82)(cid:74)(cid:82)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:87)(cid:85)(cid:68)(cid:71)(cid:72)(cid:80)(cid:68)(cid:85)(cid:78)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:68)(cid:79)(cid:36)(cid:80)(cid:83)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:17)(cid:3)(cid:68)(cid:81)(cid:71)(cid:18)(cid:82)(cid:85)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:68)(cid:605)(cid:79)(cid:76)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71) 2015 CalAmp Annual Report (Cover & Back) 2015 ANNUAL REPORT

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