Note

– Acquisitions

Fiscal

2021

Acquisitions

February 21, 2020,

Descartes acquired all of the shares of Peoplevox Limited (“Peoplevox”), a UK-based provider of cloud-based ecommerce warehouse management solutions. The purchase price for the acquisition was approximately

$24.1

million, net of cash acquired, which was funded from a combination of cash on hand and drawing on Descartes' existing credit facility. The gross contractual amount of trade receivables acquired was

$0.4

million with a fair value of

$0.4

million at the date of acquisition. Our acquisition date estimate of contractual cash flows

not

expected to be collected was nominal. The purchase price was finalized in the

three

month period ended

January 31, 2021

with

adjustments.

June 10, 2020

Descartes acquired all of the shares of Cracking Logistics Limited (“Kontainers”), a UK-based provider of client-facing digital freight execution platforms. The purchase price for the acquisition was approximately

$5.2

million, net of cash acquired, which was funded from cash on hand. Additional contingent consideration of up to

$6.0

million in cash is payable if certain revenue performance targets are met by Kontainers in the

two

years following the acquisition. The fair value of the contingent consideration was valued at

$1.4

million at the acquisition date. The gross contractual amount of trade receivables acquired was

$0.2

million with a fair value of

$0.2

million at the date of acquisition. Our acquisition date estimate of contractual cash flows

not

expected to be collected was nominal. The completion of the initial purchase price allocation is pending the finalization of the fair value for trade receivables, accrued liability balances as well as potential unrecorded liabilities. We expect to finalize the purchase price allocation on or before

June 10, 2021.

November 6, 2020,

Descartes acquired all of the shares of ShipTrack Inc. (“ShipTrack”), a provider of cloud-based mobile resource management and shipment tracking solutions. The purchase price for the acquisition was approximately

$19.0

million, net of cash acquired, which was funded from cash on hand. Additional contingent consideration of up to CAD

25.0

million in cash is payable if certain revenue performance targets are met by ShipTrack in the

two

years following the acquisition. The fair value of the contingent consideration was valued at

$2.8

million at the acquisition date. The gross contractual amount of trade receivables acquired was

$1.7

million with a fair value of

$1.7

million at the date of acquisition. Our acquisition date estimate of contractual cash flows

not

expected to be collected was nominal. The completion of the initial purchase price allocation is pending the finalization of the fair value for trade receivables, accrued liability balances, deferred revenue as well as potential unrecorded liabilities. We expect to finalize the purchase price allocation on or before

November 6, 2021.

For the businesses acquired during fiscal

2021,

we incurred acquisition-related costs of

$0.8

million for the year ended

January 31, 2021.

The acquisition-related costs were primarily for advisory services and are included in other charges in our consolidated statements of operations. For the year ended

January 31, 2021,

we have recognized

aggregate revenues of

$9.4

million, and net income (excluding any interest costs on financing the a

cquisition) of nominal from Peoplevox, Kontainers and ShipTrack since the date of acquisition in our consolidated statements of operations.

The final purchase price allocation for Peoplevox and the preliminary purchase price allocations for Kontainers and ShipTrack, which have

not

been finalized, are as follows:

	Peoplevox		Kontainers		ShipTrack		Total
Purchase price consideration:
Cash, less cash acquired related to Peoplevox ($1,634), Kontainers (overdraft of $13) and ShipTrack ($529)	24,137		5,237		19,029		48,403
Consideration payable	-		100		-		100
Contingent consideration	-		1,414		2,825		4,239
Net working capital adjustments (receivable) / payable	(42	)	(218	)	82		(178	)
	24,095		6,533		21,936		52,564
Allocated to:
Current assets, excluding cash acquired	485		253		1,846		2,584
Right-of-use assets	-		-		151		151
Current liabilities	(776	)	(989	)	(668	)	(2,433	)
Deferred revenue	(748	)	(102	)	(204	)	(1,054	)
Lease obligations	-		-		(151	)	(151	)
Deferred income tax liability	(1,615	)	-		(4,012	)	(5,627	)
Debt	-		-		(728	)	(728	)
Net tangible assets (liabilities) assumed	(2,654	)	(838	)	(3,766	)	(7,258	)

Finite life intangible assets acquired:
Customer agreements and relationships	3,631		800		3,905		8,336
Existing technology	7,651		3,000		11,102		21,753
Trade names	-		30		77		107
Non-compete covenants	285		80		291		656
Goodwill	15,182		3,461		10,327		28,970
	24,095		6,533		21,936		52,564

The above transactions were accounted for using the acquisition method in accordance with ASC Topic

805,

“Business Combinations”. The purchase price allocations in the table above represents our estimates of the allocation of the purchase price and the fair value of net assets acquired. The preliminary purchase price allocations

may

differ from the final purchase price allocations, and these differences

may

be material. Revisions to the allocation will occur as additional information about the fair value of assets and liabilities becomes available. The final purchase price allocation will be completed within

one

year from the acquisition date.

The acquired intangible assets are being amortized over their estimated useful lives as follows:

	Peoplevox	Kontainers	ShipTrack
Customer agreements and relationships (years)	10	12	13
Existing technology (years)	6	5	6
Trade names (years)	N/A	3	3
Non-compete covenants (years)	5	5	5

The goodwill on the Peoplevox, Kontainers and ShipTrack acquisitions arose as a result of the combined strategic value to our growth plan. The goodwill arising from the Peoplevox, Kontainers and ShipTrack acquisitions are

not

deductible for tax purposes.

Fiscal

2020

Acquisitions

February 12, 2019,

Descartes acquired substantially all of the assets of the businesses run by the Management Systems Resources Inc. group of companies (collectively, “Visual Compliance”), a provider of software solutions and services to automate customs, trade and fiscal compliance processes including denied and restricted party screening processes and export licensing. The purchase price for the acquisition was approximately

$248.9

million, net of cash acquired, which was funded from a combination of drawing on Descartes' existing credit facility and issuing to the sellers

0.3

million Descartes common shares from treasury. The gross contractual amount of trade receivables acquired was

$6.4

million with a fair value of

$5.2

million at the date of acquisition. Our acquisition date estimate of contractual cash flows

not

expected to be collected was

$1.2

million. The purchase price was finalized in the

three

month period ended

January 31, 2020

with

adjustments.

May 10, 2019,

Descartes acquired all the shares of Core Transport Technologies NZ Limited (“CORE”), an electronic transportation network that provides global air carriers and ground handlers with shipment scanning and tracking solutions. The purchase price for the acquisition was approximately

$21.8

million, net of cash acquired, which was funded from drawing on Descartes' existing credit facility. Additional contingent consideration of up to

$9.0

million in cash is payable if certain revenue performance targets are met by CORE in the

two

years following the acquisition. The fair value of the contingent consideration was valued at

$1.5

million at the acquisition date. The gross contractual amount of trade receivables acquired was

$0.4

million with a fair value of

$0.4

million at the date of acquisition. Our acquisition date estimate of contractual cash flows

not

expected to be collected was nominal. The purchase price was finalized in the

three

month period ended

April 30, 2020

with

adjustments.

June 27, 2019,

Descartes acquired all the shares of Tegmento AG and Contentis AG (collectively, “STEPcom”), a business-to-business supply chain integration network based in Switzerland. The purchase price for the acquisition was approximately

$18.6

million, net of cash acquired, which was funded from drawing on Descartes' existing credit facility. The gross contractual amount of trade receivables acquired was

$0.9

million with a fair value of

$0.8

million at the date of acquisition. Our acquisition date estimate of contractual cash flows

not

expected to be collected was

$0.1

million. The purchase price was finalized in the

three

month period ended

July 31, 2020

with

adjustments.

August 20, 2019,

Descartes acquired BestTransport.com, Inc. (“BestTransport”), a cloud-based transportation management system provider focused on flatbed-intensive manufacturers and distributors. The purchase price for the acquisition was approximately

$11.7

million, net of cash acquired, which was funded from drawing on Descartes' existing credit facility. The gross contractual amount of trade receivables acquired was

$0.6

million with a fair value of

$0.6

million at the date of acquisition. Our acquisition date estimate of contractual cash flows

not

expected to be collected was nominal. The purchase price was finalized in the

three

month period ended

July 31, 2020

with

adjustments.

The final purchase price allocations for businesses we acquired during

2020

are as follows:

	Visual Compliance			CORE			STEP-com			Best-Transport			Total
Purchase price consideration:
Cash, less cash acquired related to Visual Compliance ($170), CORE ($213), STEPcom ($2,700) and BestTransport ($507)		239,863			21,833			18,639			11,718			292,053
Common shares issued		9,045			-			-			-			9,045
Contingent consideration		-			1,450			-			-			1,450
Net working capital adjustments payable / (receivable)		1,147			62			250			-			1,459
		250,055			23,345			18,889			11,718			304,007
Allocated to:
Current assets, excluding cash acquired		6,403			689			1,470			815			9,377
Property and equipment		30			2,048			257			35			2,370
Deferred income tax asset		30,924			-			-			-			30,924
Right-of-use assets		1,188			68			232			194			1,682
Current liabilities		(840	)		(352	)		(874	)		(284	)		(2,350	)
Deferred revenue		(10,267	)		(278	)		(813	)		(9	)		(11,367	)
Lease obligations		(1,188	)		(68	)		(232	)		(194	)		(1,682	)
Deferred income tax liability		(282	)		(3,332	)		(2,316	)		(1,352	)		(7,282	)
Net tangible assets (liabilities) assumed		25,968			(1,225	)		(2,276	)		(795	)		21,672

Finite life intangible assets acquired:
Customer agreements and relationships		32,186			4,600			10,839			3,000			50,625
Existing technology		69,422			6,800			-			3,800			80,022
Trade names		528			200			102			50			880
Non-compete covenants		3,166			300			205			150			3,821
Goodwill		118,785			12,670			10,019			5,513			146,987
		250,055			23,345			18,889			11,718			304,007

The acquired intangible assets are being amortized over their estimated useful lives as follows:

	Visual Compliance	CORE	STEPcom	Best Transport
Customer agreements and relationships (years)	14	13	9	12
Existing technology (years)	7	6	N/A	6
Trade names (years)	5	8	3	3
Non-compete covenants (years)	5	5	3	2

The goodwill on the Visual Compliance, CORE, STEPcom and BestTransport acquisitions arose as a result of the combined strategic value to our growth plan. The goodwill arising from the CORE, STEPcom and BestTransport acquisitions is

not

deductible for tax purposes. The goodwill from the Visual Compliance acquisition is deductible for tax purposes.

Fiscal

2019

Acquisitions

February 2, 2018,

Descartes acquired Aljex Software, Inc. (“Aljex”), a cloud-based provider of back-office transportation management solutions for freight brokers and transportation providers. US-based Aljex helps customers automate business processes and create electronic documents critical for executing transportation moves through the lifecycle of a shipment. The purchase price for the acquisition was approximately

$32.4

million, net of cash acquired, which was funded from drawing on Descartes' existing credit facility. The gross contractual amount of trade receivables acquired was

$0.2

million with a fair value of

$0.2

million at the date of acquisition. Our acquisition date estimate of contractual cash flows

not

expected to be collected was nominal. The purchase price was finalized in the

three

month period ended

January 31, 2019

with

adjustments.

June 22, 2018,

Descartes acquired certain assets of Velocity Mail, LLC (“Velocity Mail”), an electronic transportation network that provides global air carriers with mail and parcel shipment scanning and tracking solutions. Using US-based Velocity Mail's network, global air carriers leverage mobile devices to accurately track shipments and deliveries in real-time. The purchase price for the acquisition was approximately

$26.1

million, net of cash acquired, which was funded from drawing on Descartes' existing credit facility. The gross contractual amount of trade receivables acquired was

$1.0

million with a fair value of

$1.0

million at the date of acquisition. Our acquisition date estimate of contractual cash flows

not

expected to be collected was nominal. The purchase price was finalized in the

three

month period ended

July 31, 2019

with

adjustments.

August 21, 2018,

Descartes acquired PinPoint GPS Solutions Inc. (“PinPoint”), a provider of fleet tracking and mobile workforce solutions. Canada-based PinPoint helps customers collect real-time location information on trucks and mobile workers using technology, including Geotab (telematics) and SkyBitz (trailer tracking). The purchase price for the acquisition was approximately

$11.0

million

(CAD

$14.4

million)

, net of cash acquired, which was funded from a combination of drawing on Descartes' existing credit facility and issuing to the sellers less than

0.1

million Descartes common shares from treasury.

Additional contingent consideration of up to

$2.3

million (CAD

$3.0

million) in cash is payable if certain revenue performance targets are met by PinPoint in the

two

years following the acquisition. The fair value of the contingent consideration was valued at

$0.7

million at the acquisition date. The gross contractual amount of trade receivables acquired was

$0.5

million with a fair value of

$0.5

million at the date of acquisition. Our acquisition date estimate of contractual cash flows

not

expected to be collected was nominal. The purchase price was finalized in the

three

month period ended

July 31, 2019

with

adjustments.

The final purchase price allocations for businesses we acquired during

2019

are as follows:

	Aljex		Velocity Mail		PinPoint		Total
Purchase price consideration:
Cash, less cash acquired related to Aljex ($193), Velocity Mail (nil) and PinPoint ($769)	32,382		26,107		9,443		67,932
Common shares issued	-		-		1,536		1,536
Contingent consideration	-		-		714		714
Net working capital adjustments (receivable) / payable	(152	)	(102	)	36		(218	)
	32,230		26,005		11,729		69,964
Allocated to:
Current assets, excluding cash acquired	607		1,407		599		2,613
Other long-term assets	-		501		-		501
Current liabilities	(266	)	(81	)	(559	)	(906	)
Deferred revenue	(1,024	)	(70	)	(574	)	(1,668	)
Deferred income tax liability	(4,200	)	-		(2,077	)	(6,277	)
Net tangible (liabilities) assets assumed	(4,883	)	1,757		(2,611	)	(5,737	)

Finite life intangible assets acquired:
Customer agreements and relationships	5,300		7,800		7,758		20,858
Existing technology	12,400		7,600		-		20,000
Tradenames	280		100		207		587
Non-compete covenants	230		300		69		599
Goodwill	18,903		8,448		6,306		33,657
	32,230		26,005		11,729		69,964

The acquired intangible assets are being amortized over their estimated useful lives as follows:

	Aljex	Velocity Mail	PinPoint
Customer agreements and relationships (years)	13	12	9
Existing technology (years)	5	5	N/A
Trade names (years)	8	4	8
Non-compete covenants (years)	5	5	5

The goodwill on the Aljex, Velocity Mail and PinPoint acquisitions arose as a result of the combined strategic value to our growth plan. The goodwill arising from the Aljex and PinPoint acquisitions is

not

deductible for tax purposes. The goodwill from the Velocity Mail acquisition is deductible for tax purposes.

Pro Forma Results of Operations (Unaudited)

The financial information in the table below summarizes selected results of operations on a pro forma basis as if we had acquired ShipTrack, Kontainers, Peoplevox, BestTransport, STEPcom, CORE, Visual Compliance, PinPoint, Velocity Mail and Aljex as of

February 1, 2018.

This pro forma information is for information purposes only and does

not

purport to represent what our actual results of operations for the periods presented would have been had the acquisitions of ShipTrack, Kontainers, Peoplevox, BestTransport, STEPcom, CORE, Visual Compliance, PinPoint, Velocity Mail and Aljex occurred at

February 1, 2018,

or to project our results of operations for any future period.

Year Ended	January 31,	January 31,	January 31,
	2021	2020	2019
Revenues	354,461	341,376	328,824
Net income	51,302	33,727	25,370
Earnings per share
Basic	0.61	0.41	0.33
Diluted	0.60	0.41	0.33