NOTE 2 - ACQUISITIONS

Navman 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, which at the time was a privately held company ("Navman"). In conjunction with the Supply Agreement, the Company also entered into an asset purchase agreement on May 7, 2012 with Navman (the "Asset Purchase Agreement") and established a research and development center in Auckland, New Zealand with employees who transferred from Navman's workforce.

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 an original face amount of $4,000,000 and a present value at the time of issuance of $3,080,000, and the fair value of the initial estimated contingent royalties consideration of $822,000 for sales by CalAmp of certain products acquired from Navman under the Asset Purchase Agreement during the first three years. The note is payable in the form of a 15% rebate on certain products sold by the Company to Navman under the Supply Agreement.

Wireless Matrix Acquisition

On March 4, 2013, the Company acquired Wireless Matrix USA, Inc. ("Wireless Matrix") for a cash payment of $53 million. The assets acquired by the Company included cash of $6.1 million. The Company funded the purchase price from the net proceeds of an equity offering of $44.8 million that was completed in February 2013, the net proceeds from a new $5 million bank term loan described in Note 5, and cash on hand.

The Company has not yet obtained all information required to complete the purchase price allocation related to this acquisition. One of the purchase price allocation areas to be completed is the valuation of deferred income taxes for the acquired business. The final purchase price allocation will be completed in the current fiscal year. Following is the unaudited preliminary purchase price allocation (in thousands):

Purchase Price				$	52,986
Less cash acquired					(6,149	)
Net cash paid					46,837
Fair value of net assets acquired:
Current assets other than cash	$	6,353
Property and equipment		1,683
Customer lists		14,440
Developed/core technology		11,180
Other non-current assets		144
Current liabilities		(4,155	)
Total fair value of net assets acquired					29,645
Goodwill				$	17,192

The Company paid a premium (i.e., goodwill) over the fair value of the net tangible and identified intangible assets acquired. The Company expects to 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. It also believes an opportunity exists to expand its turnkey offerings to global enterprise customers in new vertical markets. The Company believes that this acquisition will accelerate its development roadmap, enable it to offer higher margin turnkey solutions for new and existing customers, and further increase 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 pro forma consolidated financial information presented as if the acquisition had occurred at the beginning of fiscal 2013. The pro forma consolidated 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 three and six month periods ended August 31, 2012. In addition, the pro forma consolidated financial information does not attempt to project the future results of operations of the combined company.

(in thousands except per share amounts)

	Pro Forma
	Three Months		Six Months
	Ended		Ended
	August 31,		August 31,
	2012		2012
Revenue	$	50,201	$	102,215
Net income	$	2,293	$	5,544
Earnings per share:
Basic	$	0.07	$	0.17
Diluted	$	0.07	$	0.16
Shares used in computing earnings per share:
Basic		33,651		33,376
Diluted		34,867		34,653

The pro forma adjustments for the three and six months ended August 31, 2012 consist of adding Wireless Matrix's standalone results of operations for the three and six month periods ended July 31, 2012 to CalAmp's historical results of operations for the three and six month periods ended August 31, 2012. The pro forma net income above includes additional amortization expense of $1,188,000 and $2,376,000 for the three and six months ended August 31, 2012, respectively, related to the estimated fair value of identifiable intangible assets arising from the preliminary purchase price allocation. In addition, the number of shares used in computing pro forma earnings per share includes 5,175,000 common stock shares sold in February 2013 to fund the acquisition of Wireless Matrix, as if such shares were outstanding during the three and six month periods ended August 31, 2012.