##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended May 29, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from __________ to __________
 COMMISSION FILE NUMBER: 0-12182
 
 CALAMP CORP.
  Delaware
    
    95-3647070(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)1401 N. Rice AvenueOxnard, California
    
    93030(Address of principal executive offices)
    
    (Zip Code)
 (805) 987-9000
 
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 Yes o No þ




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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEETS (Unaudited)CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 1A. RISK FACTORSITEM 6. EXHIBITSSIGNATUREExhibit 31.1Exhibit 31.2Exhibit 32    Table of Contents  
 PART I. FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 CALAMP CORP.
 
 CONSOLIDATED BALANCE SHEETS (Unaudited)
(IN THOUSANDS, EXCEPT PAR VALUE)
 May 31,
    
    
    February 28,2010
    
    
    2010AssetsCurrent assets:Cash and cash equivalents
    
    $
    4,026
    
    
    $
    2,986Accounts receivable, less allowance for doubtful accounts of
$410 and $413 at May 31, 2010 and February 28, 2010,
respectively
    
    
    13,423
    
    
    
    16,520Inventories
    
    
    11,079
    
    
    
    10,608Deferred income tax assets
    
    
    2,263
    
    
    
    2,656Prepaid expenses and other current assets
    
    
    4,728
    
    
    
    4,720Total current assets
    
    
    35,519
    
    
    
    37,490Property, equipment and improvements, net of
accumulated depreciation and amortization
    
    
    2,283
    
    
    
    2,055Deferred income tax assets, less current portion
    
    
    10,410
    
    
    
    10,017Intangible assets, net
    
    
    4,838
    
    
    
    5,144Other assets
    
    
    2,264
    
    
    
    2,247$
    55,314
    
    
    $
    56,953Liabilities and Stockholders EquityCurrent liabilities:Bank working capital line of credit
    
    $
    7,856
    
    
    $
    5,901Accounts payable
    
    
    14,455
    
    
    
    16,186Accrued payroll and employee benefits
    
    
    2,484
    
    
    
    2,742Deferred revenue
    
    
    5,274
    
    
    
    4,740Other current liabilities
    
    
    3,553
    
    
    
    3,526Total current liabilities
    
    
    33,622
    
    
    
    33,095Long-term debt
    
    
    4,243
    
    
    
    4,170Other non-current liabilities
    
    
    262
    
    
    
    489Commitments and contingenciesStockholders equity:Preferred stock, $.01 par value; 3,000 shares authorized;
no shares issued or outstanding
    
    
    
    
    
    
    Common Stock, $.01 par value; 40,000 shares authorized;
27,644 and 27,662 shares issued and outstanding
at May 31, 2010 and February 28, 2010, respectively
    
    
    277
    
    
    
    277Additional paid-in capital
    
    
    151,918
    
    
    
    151,453Accumulated deficit
    
    
    (134,142
    )
    
    
    (131,665
    )Accumulated other comprehensive loss
    
    
    (866
    )
    
    
    (866
    )Total stockholders equity
    
    
    17,187
    
    
    
    19,199$
    55,314
    
    
    $
    56,953
   2




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CALAMP CORP.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 Three Months EndedMay 31,2010
    
    
    2009Revenues
    
    $
    26,346
    
    
    $
    23,000Cost of revenues
    
    
    20,223
    
    
    
    18,293Gross profit
    
    
    6,123
    
    
    
    4,707Operating expenses:Research and development
    
    
    2,763
    
    
    
    2,898Selling
    
    
    2,622
    
    
    
    2,201General and administrative
    
    
    2,509
    
    
    
    2,757Intangible asset amortization
    
    
    306
    
    
    
    341Total operating expenses
    
    
    8,200
    
    
    
    8,197Operating loss
    
    
    (2,077
    )
    
    
    (3,490
    )Non-operating expense:Interest expense, net
    
    
    (367
    )
    
    
    (205
    )Other expense, net
    
    
    (33
    )
    
    
    (262
    )Total non-operating expense
    
    
    (400
    )
    
    
    (467
    )Loss before income taxes
    
    
    (2,477
    )
    
    
    (3,957
    )Income tax provision
    
    
    
    
    
    
    Net loss
    
    $
    (2,477
    )
    
    $
    (3,957
    )Basic and diluted loss per share
    
    $
    (0.09
    )
    
    $
    (0.16
    )Shares used in computing basic and diluted loss per share
    
    
    26,982
    
    
    
    24,860
   3




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CALAMP CORP.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(IN THOUSANDS)
 Three Months EndedMay 31,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (2,477
    )
    
    $
    (3,957
    )Adjustments to reconcile net loss
to net cash (used in) provided by operating activities:Depreciation and amortization
    
    
    636
    
    
    
    629Stock-based compensation expense
    
    
    523
    
    
    
    412Non-cash interest expense
    
    
    134
    
    
    
    Other
    
    
    11
    
    
    
    9Changes in operating assets and liabilities:Accounts receivable
    
    
    3,097
    
    
    
    (203
    )Inventories
    
    
    (471
    )
    
    
    1,011Prepaid expenses and other assets
    
    
    (196
    )
    
    
    291Accounts payable
    
    
    (1,731
    )
    
    
    3,358Accrued liabilities
    
    
    (516
    )
    
    
    (1,280
    )Deferred revenue
    
    
    534
    
    
    
    300NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
    
    
    (456
    )
    
    
    570CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (569
    )
    
    
    (273
    )Collections on note receivable
    
    
    110
    
    
    
    75Other
    
    
    
    
    
    
    (33
    )NET CASH USED IN INVESTING ACTIVITIES
    
    
    (459
    )
    
    
    (231
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from bank line of credit borrowings
    
    
    1,955
    
    
    
    Debt repayments
    
    
    
    
    
    
    (3,125
    )NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    
    
    1,955
    
    
    
    (3,125
    )EFFECT OF EXCHANGE RATE CHANGES ON CASH
    
    
    
    
    
    
    255Net change in cash and cash equivalents
    
    
    1,040
    
    
    
    (2,531
    )Cash and cash equivalents at beginning of period
    
    
    2,986
    
    
    
    6,913Cash and cash equivalents at end of period
    
    $
    4,026
    
    
    $
    4,382
   4




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CALAMP CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MAY 31, 2010 AND 2009
 NOTE 1  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
 Description of Business
      Disclosures About Fair Value of Financial Instruments
    NOTE 2  INVENTORIES
  May 31,
    
    
    February 28,2010
    
    
    2010Raw materials
    
    $
    9,188
    
    
    $
    9,483Work in process
    
    
    232
    
    
    
    209Finished goods
    
    
    1,659
    
    
    
    916$
    11,079
    
    
    $
    10,608
  5




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NOTE 3  INTANGIBLE ASSETS
  May 31, 2010
    
    
    February 28, 2010Accum-
    
    
    
    
    
    
    
    
    
    
    Accum-Gross
    
    
    ulated
    
    
    
    
    
    
    Gross
    
    
    ulatedAmortization
    
    Carrying
    
    
    Amortiz-
    
    
    
    
    
    
    Carrying
    
    
    Amortiz-Period
    
    Amount
    
    
    ation
    
    
    Net
    
    
    Amount
    
    
    ation
    
    
    NetDeveloped/core
technology
    
    5-7 years
    
    $
    3,101
    
    
    $
    1,254
    
    
    $
    1,847
    
    
    $
    3,101
    
    
    $
    1,054
    
    
    $
    2,047Customer lists
    
    5-7 years
    
    
    1,339
    
    
    
    569
    
    
    
    770
    
    
    
    1,339
    
    
    
    475
    
    
    
    864Covenants not to compete
    
    1 year
    
    
    138
    
    
    
    77
    
    
    
    61
    
    
    
    138
    
    
    
    66
    
    
    
    72Patents
    
    4-5 years
    
    
    39
    
    
    
    9
    
    
    
    30
    
    
    
    39
    
    
    
    8
    
    
    
    31Tradename
    
    Indefinite
    
    
    2,130
    
    
    
    
    
    
    
    2,130
    
    
    
    2,130
    
    
    
    
    
    
    
    2,130$
    6,747
    
    
    $
    1,909
    
    
    $
    4,838
    
    
    $
    6,747
    
    
    $
    1,603
    
    
    $
    5,144
   2011 (remainder)
    
    $
    8272012
    
    $
    9902013
    
    $
    7322014
    
    $
    159
 NOTE 4  FINANCING ARRANGEMENTS
 Bank Working Capital Line of Credit
    6




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Long-Term Debt
  May 31,
    
    
    February 28,2010
    
    
    2010Subordinated promissory notes due December 22,
2012
    
    $
    5,000
    
    
    $
    5,000Less discount
    
    
    (757
    )
    
    
    (830
    )$
    4,243
    
    
    $
    4,170
   Other Non-Current Liabilities
  May 31,
    
    
    February 28,2010
    
    
    2010Deferred rent
    
    $
    45
    
    
    $
    88Deferred revenue
    
    
    217
    
    
    
    401$
    262
    
    
    $
    489
 NOTE 5  INCOME TAXES
    7




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NOTE 6  EARNINGS (LOSS) PER SHARE
   NOTE 7  COMPREHENSIVE INCOME (LOSS
  Three Months EndedMay 31,2010
    
    
    2009Net loss
    
    $
    (2,477
    )
    
    $
    (3,957
    )Foreign currency translation adjustments
    
    
    
    
    
    
    260Comprehensive loss
    
    $
    (2,477
    )
    
    $
    (3,697
    )
  8




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NOTE 8  STOCK-BASED COMPENSATION
  Three Months EndedMay 31,2010
    
    
    2009Cost of revenues
    
    $
    39
    
    
    $
    21Research and development
    
    
    79
    
    
    
    60Selling
    
    
    40
    
    
    
    21General and administrative
    
    
    365
    
    
    
    310$
    523
    
    
    $
    412
  WeightedNumber of
    
    
    AverageOptions
    
    
    Option PriceOutstanding at February 28, 2010
    
    
    2,023
    
    
    $
    5.82Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (21
    )
    
    
    23.46Outstanding at May 31, 2010
    
    
    2,002
    
    
    $
    5.64Exercisable at May 31, 2010
    
    
    1,262
    
    
    $
    7.52
  WeightedNumber
    
    
    Average Grantof Shares
    
    
    Date Fairand RSUs
    
    
    ValueOutstanding at February 28, 2010
    
    
    1,784
    
    
    $
    2.06Granted
    
    
    10
    
    
    
    2.47Vested
    
    
    (54
    )
    
    
    2.72Forfeited
    
    
    (15
    )
    
    
    1.80Outstanding at May 31, 2010
    
    
    1,725
    
    
    $
    2.04
    9




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NOTE 9  CONCENTRATION OF RISK
   NOTE 10  PRODUCT WARRANTIES
  Three Months EndedMay 31,2010
    
    
    2009Balance at beginning of period
    
    $
    1,231
    
    
    $
    3,286Charged to costs and expenses
    
    
    89
    
    
    
    56Deductions
    
    
    (293
    )
    
    
    (336
    )Balance at end of period$
    1,027
    
    
    $
    3,006
  NOTE 11  OTHER FINANCIAL INFORMATION
  Three Months EndedMay 31,2010
    
    
    2009Interest paid
    
    $
    117
    
    
    $
    207Income taxes refunded
    
    $
    
    
    
    $
    (13
    )
  10




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NOTE 12  SEGMENT INFORMATION
  Three Months Ended May 31, 2010
    
    
    Three Months Ended May 31, 2009Operating Segments
    
    
    
    
    
    
    
    
    
    
    Operating SegmentsWireless
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    WirelessSatellite
    
    
    DataCom
    
    
    Corporate
    
    
    Total
    
    
    Satellite
    
    
    DataCom
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    10,527
    
    
    $
    15,819
    
    
    
    
    
    
    $
    26,346
    
    
    $
    9,249
    
    
    $
    13,751
    
    
    
    
    
    
    $
    23,000Gross profit
    
    $
    793
    
    
    $
    5,330
    
    
    
    
    
    
    $
    6,123
    
    
    $
    427
    
    
    $
    4,280
    
    
    
    
    
    
    $
    4,707Gross margin
    
    
    7.5
    %
    
    
    33.7
    %
    
    
    
    
    
    
    23.2
    %
    
    
    4.6
    %
    
    
    31.1
    %
    
    
    
    
    
    
    20.5
    %Operating loss
    
    $
    (270
    )
    
    $
    (507
    )
    
    $
    (1,300
    )
    
    $
    (2,077
    )
    
    $
    (617
    )
    
    $
    (1,644
    )
    
    $
    (1,229
    )
    
    $
    (3,490
    )
   NOTE 13  COMMITMENTS AND CONTINGENCIES
 DBS Product Field Performance Issues
   Legal Proceedings
   11




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Other Contingencies
  
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  
    
    Allowance for doubtful accounts;
 
    
    Inventory write-downs;
 
    
    Product warranties;
 
    
    Deferred income tax and uncertain tax position;
 
    
    Impairment assessments of purchased intangible assets and other long-lived assets;
 
    
    Stock-based compensation expense; and
 
    
    Revenue recognition.
  12




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RESULTS OF OPERATIONS
 Overview
   WIRELESS DATACOM
  SATELLITE
  Operating Results by Business Segment
  REVENUE BY SEGMENT
 Three Months Ended May 31,2010
    
    
    2009% of
    
    
    
    
    
    
    % of$000s
    
    
    Total
    
    
    $000s
    
    
    TotalSegmentSatellite
    
    $
    10,527
    
    
    
    40.0
    %
    
    $
    9,249
    
    
    
    40.2
    %Wireless DataCom
    
    
    15,819
    
    
    
    60.0
    %
    
    
    13,751
    
    
    
    59.8
    %Total
    
    $
    26,346
    
    
    
    100.0
    %
    
    $
    23,000
    
    
    
    100.0
    %
 GROSS PROFIT BY SEGMENT
 Three Months Ended May 31,2010
    
    
    2009% of
    
    
    
    
    
    
    % of$000s
    
    
    Total
    
    
    $000s
    
    
    TotalSegmentSatellite
    
    $
    793
    
    
    
    13.0
    %
    
    $
    427
    
    
    
    9.1
    %Wireless DataCom
    
    
    5,330
    
    
    
    87.0
    %
    
    
    4,280
    
    
    
    90.9
    %Total
    
    $
    6,123
    
    
    
    100.0
    %
    
    $
    4,707
    
    
    
    100.0
    %
  13




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OPERATING LOSS BY SEGMENT
 Three Months Ended May 31,2010
    
    
    2009% of
    
    
    
    
    
    
    % ofTotal
    
    
    
    
    
    
    Total$000s
    
    
    Revenue
    
    
    $000s
    
    
    RevenueSegmentSatellite
    
    $
    (270
    )
    
    
    (1.0
    %)
    
    $
    (617
    )
    
    
    (2.7
    %)Wireless DataCom
    
    $
    (507
    )
    
    
    (1.9
    %)
    
    $
    (1,644
    )
    
    
    (7.1
    %)Corporate expenses
    
    
    (1,300
    )
    
    
    (5.0
    %)
    
    
    (1,229
    )
    
    
    (5.4
    %)Total
    
    $
    (2,077
    )
    
    
    (7.9
    %)
    
    $
    (3,490
    )
    
    
    (15.2
    %)
 Revenue
   Gross Profit and Gross Margins
    Operating Expenses
    14




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Non-operating Expense, Net
  Income Tax Provision
  LIQUIDITY AND CAPITAL RESOURCES
       15




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FORWARD LOOKING STATEMENTS
  
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Foreign Currency Risk
  Interest Rate Risk
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   16




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Internal Control Over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
   
 ITEM 1A.
    
    RISK FACTORS
  
 ITEM 6.
    
    EXHIBITS
 Exhibit 31.1
    
    
    
    Chief Executive Officer Certification pursuant to Section 302 of the
Sarbanes-Oxley Act
of 2002Exhibit 31.2
    
    
    
    Chief Financial Officer Certification pursuant to Section 302 of the
Sarbanes-Oxley Act
of 2002Exhibit 32
    
    
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 SIGNATURE
  July 8, 2010
    
    /s/ Richard K. VitelleDate
    
    Richard K. VitelleVice President Finance & CFO
(Principal Financial Officer and
Chief Accounting Officer)  17