SEGMENT INFORMATION AND MAJOR CUSTOMERS

As of the fiscal quarter ended June 30, 2017, we determined that we now have two reportable operating segments for purposes of ASC 280-10-50 "Segment Reporting": (1) M2M, and (2) Solutions.

This determination was made by considering both qualitative and quantitative information. The qualitative information considered during the quarter ended June 30, 2017 included, but was not limited to, the following: the nature of the products

5. SEGMENT INFORMATION AND MAJOR CUSTOMERS (CONTINUED)

and services and customers differ between the two segments, the Chief Operating Decision Maker (CODM) started reviewing both segments’ operating results separately and now makes decisions about the allocation of resources, and discrete financial information is available through operating income (loss) for both segments. During the third quarter of fiscal 2017, the recently acquired Solutions entities financial systems were integrated allowing for the review of discrete financial information for the Solutions segment. In addition, based on current expectations, we now expect the Solutions segment to meet the quantitative thresholds for a separate reporting segment. The financial results of the Solutions entities were previously considered not to meet the quantitative thresholds for a separate reporting segment. Our segments are described below:

M2M

Our M2M segment is composed of the following communications products and development services:


•	Cellular routers and gateways;


•	Radio frequency (RF) which include our XBee^® modules as well as other RF solutions;


•	Embedded products include Digi Connect^® and Rabbit^® embedded systems on module and single board computers;


•	Network products, which has the highest concentration of mature products, including console and serial servers and USB connected products;


•	Digi Wireless Design Services;


•	Digi Remote Manager^®; and


•	Support services which offers various levels of technical services for development assistance, consulting and training.

Solutions

We have formed the Solutions segment primarily through four acquisitions: the October 2015 acquisition of Bluenica, the November 2016 acquisition of FreshTemp, the January 2017 acquisition of SMART Temps and the October 2017 acquisition of TempAlert, LLC (TempAlert). Because the acquisition of TempAlert was subsequent to September 30, 2017, it's results are not included in our Consolidated Financial Statements (see Note 19 to our Consolidated Financial Statements). Our Solutions segment offers wireless temperature and other environmental condition monitoring services as well as employee task management services. These products and services are provided to food service, transportation, education, healthcare and pharma, and industrial markets and are marketed as Digi Smart Solutions™.

We measure our segment results primarily by reference to revenue and operating income (loss). Solutions revenue includes both product and service revenue. Certain costs incurred at the corporate level are allocated to our segments. These costs include information technology, employee benefits and shared facility services. The information technology and shared facility costs are allocated based on headcount and the employee benefits costs are allocated based on compensation costs.

Summary operating results for each of our segments were as follows (in thousands):



	Fiscal year ended September 30,
	2017			2016			2015
Revenue
M2M	$	174,237		$	202,294		$	203,847
Solutions	7,397			711			—
Total revenue	$	181,634		$	203,005		$	203,847
Operating income (loss)
M2M	$	12,804		$	18,822		$	10,889
Solutions	(3,997		)	(1,717		)	—
Total operating income	$	8,807		$	17,105		$	10,889
Depreciation and amortization
M2M	$	3,575		$	4,040		$	5,347
Solutions	1,922			544			—
Total depreciation and amortization	$	5,497		$	4,584		$	5,347

5. SEGMENT INFORMATION AND MAJOR CUSTOMERS (CONTINUED)

Total expended for property, plant and equipment was as follows (in thousand):



	Fiscal year ended September 30,
	2017		2016		2015
M2M	$	1,738	$	2,641	$	4,500
Solutions	35		88		—
Total expended for property, plant and equipment	$	1,773	$	2,729	$	4,500

Total assets for each of our segments were as follows (in thousands):



	As of September 30,
	2017		2016
M2M	$	182,555	$	184,917
Solutions	47,644		13,599
Unallocated*	114,990		137,650
Total assets	$	345,189	$	336,166

*Unallocated consists of cash and cash equivalents, current marketable securities and long-term marketable securities.

Total goodwill for each of our segments were as follows (in thousands):



	As of September 30,
	2017		2016
M2M	$	98,981	$	98,496
Solutions	33,014		10,952
Total goodwill	$	131,995	$	109,448

Net property, equipment and improvements by geographic location were as follows (in thousands):



	As of September 30,
	2017		2016
United States	$	12,648	$	13,861
International, primarily Europe	153		180
Total net property, equipment and improvements	$	12,801	$	14,041

The information in the following table provides total consolidated revenue by the geographic location of the customer (in thousands):



	Fiscal years ended September 30,
	2017		2016		2015
North America, primarily United States	$	117,749	$	131,457	$	127,592
Europe, Middle East & Africa	39,403		44,932		47,523
Asia	19,892		20,390		22,907
Latin America	4,590		6,226		5,825
Total revenue	$	181,634	$	203,005	$	203,847

Our U.S. export sales represented 37.1%, 38.7% and 39.4% of revenue for the fiscal years ended September 30, 2017, 2016 and 2015. No single customer exceeded 10% of revenue for any of the periods presented. No single customer exceeded 10% of total accounts receivable at September 30, 2017 and 2016. At September 30, 2015, we had two customers, whose accounts receivable balance represented 11.6% and 10.7% of total accounts receivable.