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
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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
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Chairman of the Board
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Executive Chairman of the Board
Business Consultant & Private Investor
Auther it - Software Corporation
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Principal
Alexy Capital Management
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CalAmp Corp.
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(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.
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Chairman of the Board
Western Digital Corporation
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President, CEO and Director
Silicon Graphics International Corp.
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Private Investor
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Senior Vice President, Corporate Development
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Executive Vice President,
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Corporate Secretary
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SingerLewak LLP
Los Angeles, CA
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Gibson, Dunn & Crutcher, LLP
Los Angeles, CA
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American Stock Transfer and Trust Co.
6201 15th Avenue
Brooklyn, NY 11219
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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
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set forth under the heading
e heading “Risk Factors” beginning of page 6 of this annual report.
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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:
•
•
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•
•
•
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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
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Chairman of the Board
Business Consultant & Private Investor
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Executive Chairman of the Board
Auther it - Software Corporation
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Principal
Alexy Capital Management
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(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.
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(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
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President, CEO and Director
Silicon Graphics International Corp.
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Private Investor
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(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)
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Senior Vice President, Corporate Development
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Executive Vice President,
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Corporate Secretary
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SingerLewak LLP
Los Angeles, CA
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Gibson, Dunn & Crutcher, LLP
Los Angeles, CA
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American Stock Transfer and Trust Co.
6201 15th Avenue
Brooklyn, NY 11219
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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
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set forth under the heading
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e heading “Risk Factors” beginning of page 6 of this annual report.
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States of America and/or other countries. Third party trad
States of America and/or other countries. Third party trademarks are the property of their respective owners.
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2015 CalAmp Annual Report (Cover & Back)
2015
ANNUAL REPORT