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Acquisitions and Divestitures | 6 Months Ended
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Jun. 30, 2016
Business Combinations [Abstract] |
Acquisitions and Divestitures | Acquisitions and Divestitures Acquisitions DigiCore Holdings Limited (DBA Ctrack) On June 18, 2015, the Company entered into a transaction implementation agreement (the “TIA”) with DigiCore Holdings Limited (“DigiCore” or “Ctrack”). Pursuant to the terms of the TIA, the Company acquired 100% of the issued and outstanding ordinary shares of DigiCore (with the exception of certain excluded shares, including treasury shares) for 4.40 South African Rand per ordinary share outstanding on October 5, 2015. Upon consummation of the acquisition, DigiCore became an indirect wholly-owned subsidiary of the Company. Upon the closing of the transaction, holders of unvested in-the-money DigiCore stock options received stock options to purchase shares of the Company’s common stock as replacement awards. In connection with the acquisition, the Company incurred $1.7 million in total transaction costs and expenses, all of which were recognized in 2015. Purchase Price The total purchase price was approximately $80.0 million and included a cash payment for all of the outstanding ordinary shares of DigiCore and the purchase of in-the-money vested stock options held by Ctrack employees on the closing date of the transaction and the portion of the fair value of replacement equity awards issued to Ctrack employees that related to services performed prior to the date the transaction closed. Set forth below is supplemental purchase consideration information related to the Ctrack acquisition (in thousands):
Cash payments |  | $ | 79,365 |
Fair value of replacement equity awards issued to Ctrack employees for preacquisition services |  | 623 |
Total purchase price |  | $ | 79,988 |
Allocation of Fair Value The Company accounted for the transaction using the acquisition method and, accordingly, the consideration has been allocated to the tangible and intangible assets acquired and liabilities assumed on the basis of their respective estimated fair values on the acquisition date. Goodwill resulting from this acquisition is largely attributable to the experienced workforce of Ctrack and synergies expected to arise after the integration of Ctrack’s products and operations into those of the Company. Goodwill resulting from this acquisition is not deductible for tax purposes. Identifiable intangible assets acquired as part of the acquisition included definite-lived intangible assets for developed technologies, customer relationships and trade names, which are being amortized using the straight-line method over their estimated useful lives, as well as indefinite-lived intangible assets. Liabilities assumed from Ctrack included a mortgage bond and capital lease obligations. The fair value has been allocated based on the estimated fair values of assets acquired and liabilities assumed as follows (in thousands):
|  | October 5, 2015
Cash |  | $ | 2,437 |
Accounts receivable |  | 15,052 |
Inventory |  | 11,361 |
Property, plant and equipment |  | 5,924 |
Rental assets |  | 6,603 |
Intangible assets |  | 28,270 |
Goodwill |  | 29,273 |
Other assets |  | 5,695 |
Bank facilities |  | (2,124 | )
Accounts payable |  | (7,446 | )
Accrued and other liabilities |  | (15,018 | )
Noncontrolling interests |  | (39 | )
Net assets acquired |  | $ | 79,988 |
The above fair value allocation is considered preliminary and is subject to revision during the measurement period. Management is in the process of completing its evaluation of obligations related to income tax. Valuation of Intangible Assets Acquired The following table sets forth the components of definite-lived intangible assets acquired in connection with the Ctrack acquisition (in thousands):
|  | Amount Assigned |  | Amortization Period (in years)
Developed technologies |  | $ | 10,170 |  |  | 6.0
Trade name |  | 14,030 |  |  | 10.0
Customer relationships |  | 4,070 |  |  | 5.0
Total intangible assets acquired |  | $ | 28,270 |  |  |
R.E.R. Enterprises, Inc. (DBA Feeney Wireless) On March 27, 2015, the Company entered into an asset purchase agreement (“APA”) with R.E.R. Enterprises, Inc. (“RER”) to acquire all of the issued and outstanding shares of RER and its wholly-owned subsidiary and principal operating asset, Feeney Wireless, LLC, an Oregon limited liability company (collectively, “FW”), which develops and sells solutions for the Internet of Things that integrate wireless communications into business processes. This strategic acquisition expanded the Company’s product and solutions offerings to include private labeled cellular routers, in-house designed and assembled cellular routers, high-end wireless surveillance systems, modems, computers and software, along with associated hardware, purchased from major industry suppliers. Additionally, FW’s services portfolio includes consulting, systems integration and device management services. In connection with the acquisition, the Company incurred $0.9 million in total costs and expenses, all of which were recognized in 2015. Purchase Price The total consideration was approximately $24.8 million and included a cash payment at closing of approximately $9.3 million, $1.5 million of which was placed into an escrow fund to serve as partial security for the indemnification obligations of RER and its former shareholders, the Company’s assumption of $0.5 million in certain transaction-related expenses incurred by FW, and the future issuance of shares of the Company’s common stock valued at $15.0 million, which would have been payable in March 2016. The total consideration of $24.8 million did not include amounts, if any, payable under an earn-out arrangement pursuant to which the Company may have been required to pay up to an additional $25.0 million to the former shareholders of RER contingent upon FW’s achievement of certain financial targets for the years ending December 31, 2015, 2016, and 2017 (the “Earn-Out Arrangement”). Such payments, if any, under the Earn-Out Arrangement would have been payable in either cash or shares of the Company’s common stock at the discretion of the Company, and would have been recorded as compensation expense during the service period earned. Set forth below is supplemental purchase consideration information related to the FW acquisition (in thousands):
Cash payments |  | $ | 9,268 |
Future issuance of common stock |  | 15,000 |
Other assumed liabilities |  | 509 |
Total purchase price |  | $ | 24,777 |
On January 5, 2016, the Company and RER amended certain payment terms of the APA. Under the amended agreement, the $1.5 million placed into escrow on the date of acquisition was released to RER and its former shareholders on January 8, 2016, and the $15.0 million that was payable in shares of the Company’s common stock in March 2016 will now be paid in five cash installments over a four-year period, beginning in March 2016. In addition, the Earn-Out Arrangement has been amended as follows: (a) any amount earned under the Earn-Out Arrangement for the achievement of financial targets for the year ended December 31, 2015 will now be paid in five cash installments over a four-year period, beginning in March 2016 and (b) in replacement of the potential earn-out contingent upon FW’s achievement of certain financial targets for the years ended December 31, 2016 and 2017 the Company will issue to the former shareholders of RER approximately 2.9 million shares of the Company’s common stock in three equal installments over a three-year period, beginning in March 2017, contingent upon the retention of certain key personnel. The Company recognized approximately $0.8 million in expense during the six months ended June 30, 2016 in connection with the potential payment, in the form of shares of the Company’s common stock to the former shareholders of RER, which is contingent upon FW’s retention of certain key personnel. As of June 30, 2016, the total amount earned pursuant to the Earn-Out Arrangement was $6.9 million, $6.1 million of which remained outstanding and is included in accrued expenses and other current liabilities and other long-term liabilities in the unaudited condensed consolidated balance sheets. Allocation of Fair Value The Company accounted for the transaction using the acquisition method and, accordingly, the consideration has been allocated to the tangible and intangible assets acquired and liabilities assumed on the basis of their respective estimated fair values on the acquisition date as set forth below. Goodwill resulting from this acquisition is largely attributable to the experienced workforce of FW and synergies expected to arise after the integration of FW’s products and operations into those of the Company. Goodwill resulting from this acquisition is deductible for tax purposes. Identifiable intangible assets acquired as part of the acquisition included definite-lived intangible assets for developed technologies, customer relationships, and trademarks, which are being amortized using the straight-line method over their estimated useful lives, as well as indefinite-lived intangible assets, including in-process research and development. Liabilities assumed from FW included a term loan and capital lease obligations. The term loan and certain capital lease obligations were paid in full by the Company immediately following the closing of the acquisition on March 27, 2015. The fair value has been allocated based on the estimated fair values of assets acquired and liabilities assumed as follows (in thousands):
|  | March 27, 2015
Cash |  | $ | 205 |
Accounts receivable |  | 3,331 |
Inventory |  | 10,008 |
Property, plant and equipment |  | 535 |
Intangible assets |  | 18,880 |
Goodwill |  | 3,949 |
Other assets |  | 544 |
Accounts payable |  | (7,494 | )
Accrued and other liabilities |  | (1,916 | )
Deferred revenues |  | (270 | )
Note payable |  | (2,575 | )
Capital lease obligations |  | (420 | )
Net assets acquired |  | $ | 24,777 |
Valuation of Intangible Assets Acquired The following table sets forth the components of intangible assets acquired in connection with the FW acquisition (dollars in thousands):
|  | Amount Assigned |  | Amortization Period (in years)
Definite-lived intangible assets: |  |  |  |
Developed technologies |  | $ | 3,660 |  |  | 6.0
Trademarks |  | 4,700 |  |  | 10.0
Customer relationships |  | 8,500 |  |  | 10.0
Indefinite-lived intangible assets: |  |  |  |
In-process research and development |  | 2,020 |  |  |
Total intangible assets acquired |  | $ | 18,880 |  |  |
Pro Forma Summary The unaudited consolidated pro forma results for the three and six months ended June 30, 2016 and 2015 are set forth in the table below (in thousands). These pro forma consolidated results combine the results of operations of the Company, Ctrack and FW as though Ctrack and FW had been acquired as of January 1, 2015 and include amortization charges for the acquired intangibles for both acquisitions and interest expense related to the Company’s borrowings to finance the Ctrack acquisition. The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2015.
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2016 |  | 2015 |  | 2016 |  | 2015
Net revenues | $ | 62,811 |  |  | $ | 67,861 |  |  | $ | 129,755 |  |  | $ | 143,782 |
Net loss | $ | (2,693 | ) |  | $ | (9,310 | ) |  | $ | (14,592 | ) |  | $ | (20,318 | )
Divestiture On April 11, 2016, the Company signed a definitive asset purchase agreement with Telit Technologies (Cyprus) Limited and Telit Wireless Solutions, Inc. (collectively, “Telit”) pursuant to which the Company sold, and Telit acquired, certain hardware modules and related assets for an initial purchase price of $11.0 million in cash, which includes $9.0 million that was paid to the Company on the closing date of the transaction, $1.0 million that will be paid to the Company in equal quarterly installments over a two-year period in connection with the provision by the Company of certain transition services and $1.0 million that will be paid to the Company following the satisfaction of certain conditions by the Company, including the assignment of specified contracts and the delivery of certain certifications and approvals. The Company also has the potential to receive an additional cash payment of approximately $3.8 million from Telit related to their purchase of module product inventory from the Company, $1.0 million of which will be paid to the Company in equal quarterly installments over the two-year period following the closing date in connection with the provision by the Company of certain transition services. In addition to the above, the Company may be entitled to receive a subsequent earn-out payment following the closing of the transaction if certain conditions are met. During the three months ended June 30, 2016, the Company received approximately $9.3 million in cash and recognized a gain of approximately $6.9 million in connection with the fulfillment of certain obligations pursuant to the agreement, which is included in other income (expense), net, in the unaudited condensed consolidated statements of operations. The Company also recorded a liability for the fair value of the obligations that have yet to be fulfilled by the Company, which was $3.7 million as of June 30, 2016, and is included in accrued expenses and other current liabilities in the unaudited condensed consolidated balance sheets, and a receivable for the remainder of the cash to be received from Telit pursuant to the agreement, which was $5.4 million as of June 30, 2016, and is included in other assets and prepaid expenses and other in the unaudited condensed consolidated balance sheets.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1497-128463 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1490-128463 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1392-128463 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7008-128479 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1486-128463 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6927-128479 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4845-128472 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1524-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7000-128479 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4922-128472 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4934-128472 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4926-128472 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=73530397&loc=SL65897772-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1383-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6996-128479 + Details
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