SEGMENT REPORTING AND GEOGRAPHIC INFORMATION


(a)	General Information

As of December 31 2011, the Company’s operations are based upon three operating segments:


(1)	Energy & Security Sonar Solutions whose activities are focused on the following areas – sonar and acoustic related solutions for energy, defense and commercial markets and includes other real-time and embedded hardware & software development and production. Energy & Security Sonar Solutions activities are provided through the Company’s DSIT Solutions Ltd. subsidiary.


(2)	The Company’s GridSense segment provides Smart Grid Distribution Automation products and services. As these activities were acquired in May 2010 (see Note 4(a)(ii)), there are no comparative results reported for these activities for the year ended December 31, 2009. The Company’s GridSense segment also includes the activities of OMI which was acquired in May 2010 (see Note 4(a)(iii)).

(3)

The Company’s USSI segment provides Energy and Security Sensor Systems services. USSI was effectively acquired in February 2010 (see Note 4(b)). USSI's primary focus is to develop and produce fiber optic sensing systems for the energy and security markets. As these activities were effectively acquired in February 2010, there are no comparative results reported for these activities for the year ended December 31, 2009.

Other operations include various operations in DSIT that do not meet the quantitative thresholds under applicable accounting principles.

The Company’s reportable segments are strategic business units, offering different products and services and are managed separately as each business requires different technology and marketing strategies. Similar operating segments are aggregated into one reportable segment.


(b)	Information about Profit or Loss and Assets

The accounting policies of all the segments are those described in the summary of significant accounting policies. The Company evaluates performance based on net income or loss before taxes.

The Company does not systematically allocate assets to the divisions of the subsidiaries constituting its consolidated group, unless the division constitutes a significant operation. Accordingly, where a division of a subsidiary constitutes a segment that does not meet the quantitative thresholds of applicable accounting principles, depreciation expense is recorded against the operations of such segment, without allocating the related depreciable assets to that segment. However, where a division of a subsidiary constitutes a segment that does meet the quantitative thresholds, related depreciable assets, along with other identifiable assets, are allocated to such division.

The following tables represent segmented data for the years ended December 31, 2011, 2010 and 2009:



	Energy & Security Sonar Solutions			GridSense				USSI			Other		Total
Year ended December 31, 2011:
Revenues from external customers	$	9,104		$	7,119			$	1,316		$	1,389	$	18,928
Intersegment revenues	—			—				—			—		—
Segment gross profit (loss)	3,019			3,327				(98		)	665		6,913
Depreciation and amortization	220			375				224			28		847
Stock compensation expense	—			—				—			—		—
Segment net income (loss) before income taxes	(244		)	(1,448		)		(2,775		)	298		(4,169		)
Non-controlling interests in segment income (loss)	(42		)	—				(571		)	51		(562		)
Segment assets	932			7,757				5,515			33		14,237
Expenditures for segment assets	103			74				276			22		475
Year ended December 31, 2010:
Revenues from external customers	$	10,179		$	2,382			$	405		$	1,278	$	14,244
Intersegment revenues	—			—				—			—		—
Segment gross profit	4,380			1,172				23			469		6,044
Depreciation and amortization	172			242				141			23		578
Stock compensation expense	42			—				—			—		42
Impairments	—			1,166				—			—		1,166
Segment net income (loss) before income taxes	1,488			(2,852		)	*	(1,191		)	77		(2,478		)
Non-controlling interests in segment income (loss)	172			—				(776		)	9		(595		)
Segment assets	1,115			7,466				4,279			46		12,906
Expenditures for segment assets	89			9				90			21		209
Year ended December 31, 2009:
Revenues from external customers	$	7,985		$	—			$	—		$	1,234	$	9,219
Intersegment revenues	5			—				—			—		5
Segment gross profit	3,540			—				—			415		3,955
Depreciation and amortization	189			—				—			25		214
Stock compensation expense	2			—				—			—		2
Impairments	—			—				—			—		—
Segment net income (loss) before income taxes	1,051			—				—			64		1,115
Non-controlling interests in segment income (loss)	194			—				—			12		206
Segment assets	1,116			—				—			45		1,161
Expenditures for segment assets	154			—				—			38		192

* Includes goodwill impairment of $1,166

(c) The following tables represent a reconciliation of the segment data to consolidated statement of operations and balance sheet data for the years ended and as of December 31, 2009, 2010 and 2011:



	Year ended December 31,
	2009			2010			2011
Revenues:
Total consolidated revenues for reportable segments	$	7,985		$	12,966		$	17,539
Other operational segment revenues	1,234			1,278			1,389
Total consolidated revenues	$	9,219		$	14,244		$	18,928
Income (loss):
Total net income (loss) before income taxes for reportable segments	$	1,051		(2,555		)	(4,467		)
Other operational segment net income before income taxes	64			77			298
Total segment net income (loss) before income taxes	1,115			(2,478		)	(4,169		)
Unallocated cost of corporate and DSIT headquarters*	(3,390		)	(4,273		)	(3,891		)
Income tax benefit (expense)	719			(671		)	12,767
Non-controlling interests (see Note 8)	(206		)	595			549
Impairments not allocated to reportable segments (see Note 13)	(81		)	—			—
Share of losses in GridSense (see Note 4)	(129		)	—			—
Share of income in Paketeria (see Note 7(b))	263			—			—
Gain on sale of shares in Comverge (see Note 6)	1,403			—			—
Gain on investment in GridSense (see Note 4(a)(ii))	—			1,327			—
Dividends from EnerTech (see Note 7(a))	—			135			—
Loss on the sale of EnerTech (see Note 7(a))	—			(1,821		)	—
Gain on sale of HangXing (see Note 7(c))	—			—			492
Loss from discontinued operations, net of income taxes (see Note 3(b))	(6,076		)	(19,803		)	(1,948		)
Non-controlling interest share of loss from discontinued operations	626			67			540
Gain on the sale of discontinued operations, net of income taxes	—			—			31,069
Gain on the deconsolidation of Coreworx (see Note 5(b))	—			1,834			—
Consolidated net income (loss) attributable to Acorn Energy, Inc. shareholders	$	(5,756	)	$	(25,088	)	$	35,409

* Includes $676, $648, and $458 of stock compensation expense for the years ending December 31, 2009, 2010 and 2011, respectively.



	As of December 31,
	2009		2010		2011
Assets:
Total assets for reportable segments	$	1,161	$	12,906	$	14,237
Unallocated assets of DSIT headquarters	7,709		12,643		13,569
Assets of discontinued operations	28,176		27,597		—
Assets of corporate headquarters *	11,689		6,639		57,999
Total consolidated assets	$	48,735	$	59,785	$	85,805

* In 2011, includes $33,666 of unrestricted cash, $18,000 of short-term deposits and $5,961 of funds held in escrow. In 2010, includes $6,259 of unrestricted cash and $300 of restricted deposits. In 2009, includes $8,031 of unrestricted cash, $300 of restricted deposits and $2,237 of other investments.



Other Significant Items	Segment Totals		Adjustments		Consolidated Totals
Year ended December 31, 2011
Depreciation and amortization	$	847	$	4	$	851
Stock compensation expense	—		458		458
Expenditures for assets	475		27		502
Year ended December 31, 2010
Depreciation and amortization	$	578	$	25	$	603
Stock compensation expense	42		648		690
Expenditures for assets	209		28		237
Year ended December 31, 2009
Depreciation and amortization	$	214	$	2	$	216
Stock compensation expense	2		676		678
Expenditures for assets	192		48		240

Other reconciling items are primarily corporate headquarters data, which are not included in the segment information. None of the other adjustments are significant.



	December 31,
	2009		2010		2011
Revenues based on location of customer:
United States and Canada	$	—	$	1,172	$	4,936
Israel	5,754		5,830		4,268
Asia	3,456		5,558		6,280
Oceania	—		1,489		3,190
Other	9		195		254
	$	9,219	$	14,244	$	18,928



	December 31,
	2009		2010		2011
Long-lived assets located in the following countries:
United States	$	9	$	141	$	350
Israel	281		288		235
Australia	—		61		50
	$	290	$	490	$	635


(d)	Revenues from Major Customers



		Consolidated Revenues
		2009				2010				2011
Customer	Segment	Revenues		% of Total Revenues		Revenues		% of Total Revenues		Revenues		% of Total Revenues
A	Energy & Security Sonar Solutions	$	2,999	33	%	$	3,998	28	%	$	1,104	6	%
B	Energy & Security Sonar Solutions	$	2,625	28	%	1,725		12	%	89		—	%
C	Energy & Security Sonar Solutions	$	1,051	11	%	783		5	%	650		3	%
D	Energy & Security Sonar Solutions	$	969	11	%	1,057		7	%	1,077		6	%
E	Energy & Security Sonar Solutions	$	—	—	%	—		—	%	2,155		11	%
F	GridSense	$	—	—	%	5		—	%	2,436		13	%