3 unchanged sentences
For fiscal years ended September 30, 2020, 2019 and 2018
−Removed: (in thousands)
−Removed: Treasury Stock
−Removed: Comprehensive
−Removed: Stockholders’
+Added: (in thousands) Accumulated
+Added: Additional Other Total
+Added: Common Stock Treasury Stock Paid-In Retained Comprehensive Stockholders’
+Added: Shares Par Value Shares Value Capital Earnings Loss Equity
Balances, September 30, 2017 33,008 $ 330 6,437 $ ( 54,533 ) $ 245,528 $ 150,363 $ ( 22,659 ) $ 319,029
Cumulative-effect adjustment from adoption of ASU 2016-09 — — — — 52 ( 33 ) — 19
−Removed: Other comprehensive income
+Added: Net income — — — — — 1,631 — 1,631
+Added: Other comprehensive loss — — — — — — ( 867 ) ( 867 )
Employee stock purchase plan issuances — — ( 126 ) 1,065 50 — — 1,115
−Removed: Repurchase of common stock
+Added: Taxes paid for net share settlement of share-based payment awards — — 74 ( 748 ) — — — ( 748 )
Issuance of stock under stock award plans 805 8 — — 5,452 — — 5,460
−Removed: Tax impact from equity awards
Stock-based compensation expense — — — — 4,854 — — 4,854
Balances, September 30, 2018 33,813 338 6,385 ( 54,216 ) 255,936 151,961 ( 23,526 ) 330,493
−Removed: Cumulative-effect adjustment from adoption of ASU 2016-09
+Added: Net income — — — — — 9,958 — 9,958
Other comprehensive loss — — — — — — ( 1,989 ) ( 1,989 )
Employee stock purchase plan issuances — — ( 111 ) 948 110 — — 1,058
−Removed: Repurchase of common stock
+Added: Taxes paid for net share settlement of share-based payment awards — — 93 ( 1,071 ) — — — ( 1,071 )
Issuance of stock under stock award plans 795 8 — — 4,866 — — 4,874
1 unchanged sentence
Balances, September 30, 2019 34,608 346 6,367 ( 54,339 ) 266,567 161,919 ( 25,515 ) 348,978
−Removed: Other comprehensive loss
+Added: Net income — — — — — 8,411 — 8,411
+Added: Other comprehensive income — — — — — — 1,698 1,698
Employee stock purchase plan issuances — — ( 118 ) 1,021 44 — — 1,065
−Removed: Repurchase of common stock
+Added: Taxes paid for net share settlement of share-based payment awards — — 104 ( 1,791 ) — — — ( 1,791 )
Issuance of stock under stock award plans 905 9 — — 5,893 — — 5,902
1 unchanged sentence
Balances, September 30, 2020 35,513 $ 355 6,353 $ ( 55,109 ) $ 279,741 $ 170,330 $ ( 23,817 ) $ 371,500
−Removed: *Prior period information has been restated for the adoption of ASU No.
−Removed: 2014-09, “ Revenue from Contracts with Customers (Topic 606) ”, which we adopted on October 1, 2018.
The accompanying notes are an integral part of the consolidated financial statements.
12 unchanged sentences
The subcategories within total revenue and total cost of sales were redefined in 2019 into "Product" and "Service".
−Removed: Prior year hardware product and services and solutions amounts have been reclassified to conform to our fiscal 2019 presentation.
−Removed: There was no change to total revenue and total cost of sales for fiscal 2018 and 2017 except for the adoption of ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”) discussed later in this note.
+Added: Fiscal 2018 hardware product and services and solutions amounts have been reclassified to conform to our fiscal 2020 and fiscal 2019 presentation.
Accounting Estimates
8 unchanged sentences
Marketable Securities
−Removed: Marketable securities may consist of certificates of deposit, commercial paper, corporate bonds and government municipal bonds.
−Removed: All marketable securities are accounted for as available-for-sale and are carried at fair value on our Consolidated Balance Sheets with unrealized gains and losses recorded in accumulated other comprehensive loss within stockholders’ equity.
−Removed: In order to estimate the fair value for each security in our investment portfolio, we obtain quoted market prices and trading activity for each security when available.
−Removed: We obtain relevant information from our investment advisor and, if warranted, may review the financial solvency of certain security issuers.
−Removed: We regularly monitor and evaluate the value of our marketable securities.
−Removed: When assessing marketable securities for other-than-temporary declines in value, we consider several factors.
−Removed: These factors include:
+Added: Marketable securities previously consisted of certificates of deposit, commercial paper, corporate bonds and government municipal bonds.
+Added: All marketable securities were accounted for as available-for-sale and were carried at fair value on our Consolidated Balance Sheets with unrealized gains and losses recorded in accumulated other comprehensive loss within stockholders’ equity.
+Added: In order to estimate the fair value for each security in our investment portfolio, we obtained quoted market prices and trading activity for each security when available.
+Added: We obtained relevant information from our investment advisor and, if warranted, we may have reviewed the financial solvency of certain security issuers.
+Added: We regularly monitored and evaluated the value of our marketable securities.
+Added: When assessing marketable securities for other-than-temporary declines in value, we considered several factors.
+Added: These factors included:
how significant the decline in value is as a percentage of the original cost, how long the market value of the investment has been less than its original cost, the underlying factors contributing to a decline in the prices of securities in a single asset class, the performance of the issuer’s stock price in relation to the stock price of its competitors within the industry, expected market volatility, analyst recommendations, the views of external investment managers, any news or financial information that has been released specific to the investee and the outlook for the overall industry in which the issuer operates.
−Removed: If events and circumstances indicate that a decline in the value of a security has occurred and is other-than-temporary, we would record a charge to other income, net.
+Added: If events and circumstances indicate that a decline in the value of a security had occurred and is other-than-temporary, we would record a charge to other income, net.
Accounts Receivable
Accounts receivable are stated at the amount we expect to collect.
−Removed: This amount is net of an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments and a reserve for future returns and pricing adjustments.
+Added: This amount is net of an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments and a reserve for future credit returns and pricing adjustments.
The following factors are considered when determining the collectability of specific customer accounts:
customer creditworthiness, past transaction history with the customer, and changes in customer payment terms or practices.
−Removed: In addition, overall historical collection experience, current economic industry trends, and a review of the current status of trade
+Added: In addition, overall historical collection experience, current economic industry trends, and a review of the current status of trade accounts receivable are considered when determining the required allowance for doubtful accounts.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
−Removed: accounts receivable are considered when determining the required allowance for doubtful accounts.
−Removed: Based on our assessment, we provide for estimated uncollectible amounts through a charge to earnings and a credit to our allowance for doubtful accounts.
+Added: our assessment, we provide for estimated uncollectible amounts through a charge to earnings and a credit to our allowance for doubtful accounts.
Balances that remain outstanding after we have used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable.
−Removed: Estimated reserves for future returns and pricing adjustments are established by us based on an analysis of historical patterns of returns and price adjustments as well as an analysis of authorized returns compared to received returns and distribution sales for the current period.
−Removed: Estimated reserves for future returns and price adjustments are charged against revenue in the same period as the corresponding sales are recorded.
+Added: Estimated reserves for future credit returns and pricing adjustments are established based on an analysis of historical patterns of credit returns and price adjustments compared to received credit returns and distribution sales for the current period.
+Added: Estimated reserves for future credit returns and price adjustments are charged against revenue in the same period as the corresponding sales are recorded.
+Added: Estimated sales returns for our distributor stock rotation program are accounted for under the guidance of Accounting Standard Codification (ASC) 845 Nonmonetary Transactions .
Inventories are valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method.
3 unchanged sentences
Depreciation is provided by charges to operations using the straight-line method over the estimated asset useful lives.
−Removed: Furniture and fixtures, purchased software and other equipment are depreciated over a period of three to seven years.
−Removed: Building improvements and buildings are depreciated over ten and thirty-nine years, respectively.
+Added: Furniture and fixtures, purchased software and other equipment are depreciated over a period of three years to ten years .
+Added: Building improvements and buildings are depreciated over ten years and thirty-nine years , respectively.
Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life of the asset.
4 unchanged sentences
Purchased proven technology, license agreements, covenants not to compete and other identifiable intangible assets are recorded at fair value when acquired in a business acquisition, or at cost when not purchased in a business acquisition.
−Removed: All other identifiable intangible assets are amortized on either a straight-line basis over their estimated useful lives of three to twelve years or based on the pattern in which the asset is consumed.
+Added: All other identifiable intangible assets are amortized on a straight-line basis over their estimated useful lives of three years to 14.5 years.
Useful lives for identifiable intangible assets are estimated at the time of acquisition based on the periods of time from which we expect to derive benefits from the identifiable intangible assets.
2 unchanged sentences
Identifiable intangible assets are reviewed for impairment whenever events or circumstances indicate that undiscounted expected future cash flows are not sufficient to recover the carrying value amount.
−Removed: We measure impairment loss by utilizing a cash flow valuation technique using the income approach.
−Removed: Impairment losses, if any, would be recorded in the period the impairment is identified.
+Added: Impairment losses, if any, are recorded in the period the impairment is identified.
There were no impairments identified in fiscal 2020, 2019 or 2018.
1 unchanged sentence
Goodwill is quantitatively tested for impairment on an annual basis as of June 30, or more frequently if events or circumstances occur which could indicate impairment.
−Removed: We have two reportable operating segments, our IoT Solutions segment and our IoT Products & Services segment (see Note 4 to the consolidated financial statements).
−Removed: As a result, we concluded that the IoT Solutions segment and the IoT Products & Services segment constitute separate reporting units for purposes of the ASC 350-20-35 "Goodwill Measurement of Impairment" assessment and both units were tested individually for impairment.
−Removed: For our quantitative goodwill impairment tests, we determine the estimated fair value of each reporting unit and compare it to the carrying value of the reporting unit.
−Removed: If the carrying amount of a reporting unit is higher than its estimated fair value, an
+Added: We have two reportable operating segments, our IoT Products & Services segment and our IoT Solutions segment (see Note 4 to the consolidated financial statements).
+Added: As a result, we concluded that the IoT Products & Services segment and the IoT Solutions segment constitute separate reporting units for purposes of the ASC 350-20-35 "Goodwill Measurement of Impairment" assessment and both units were tested individually for impairment.
+Added: For our quantitative goodwill impairment tests, we determine the estimated fair value of each reporting unit and compare it to the carrying value of the reporting unit, including goodwill.
+Added: If the carrying amount of a reporting unit is higher than its estimated fair value, then an impairment loss must be recognized for the excess.
+Added: Fair values for both reporting units were each estimated on a standalone basis using a weighted combination of the income approach and market approach.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
−Removed: impairment loss must be recognized for the excess.
−Removed: Fair values for both reporting units were each estimated on a standalone basis using a weighted combination of the income approach and market approach.
The income approach indicates the fair value of a business based on the value of the cash flows the business or asset can be expected to generate in the future.
3 unchanged sentences
Significant judgment is required to estimate the amount and timing of future cash flows for each reporting unit and the relative risk of achieving those cash flows.
−Removed: The market approach indicates the fair value of a business or asset based on a comparison of the business or asset to comparable publicly traded companies or assets and transactions in its industry as well as prior company or asset transactions.
+Added: The market approach indicates the fair value of a business or asset based on a comparison of the business or asset to comparable publicly traded companies or assets and transactions in its industry as well as our prior acquisitions.
This approach can be estimated through the guideline company method.
2 unchanged sentences
These multiples are then applied to the reporting units to estimate a fair value.
−Removed: Assumptions and estimates to determine fair values are complex and often subjective.
−Removed: They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts.
−Removed: For example, if our future operating results do not meet current forecasts or if we experience a sustained decline in our market capitalization that is determined to be indicative of a reduction in fair value of one or more of our reporting units, we may be required to record future impairment charges for goodwill.
+Added: Results of our Fiscal 2020 Annual Impairment Test
+Added: We had a total of $ 157.1 million of goodwill for the IoT Products & Services reporting unit and $ 49.6 million of goodwill for the IoT Solutions reporting unit as of June 30, 2020.
+Added: At June 30, 2020, fair value exceeded the carrying value by more than 10% for both reporting units.
+Added: Implied fair values for both reporting units were each calculated on a standalone basis using a weighted combination of the income approach and market approach.
+Added: The implied fair values of each reporting unit were added together to get an indicated value of total equity to which a range of indicated value of total equity was derived.
+Added: This range was compared to the total market capitalization of $ 338.2 million as of June 30, 2020.
+Added: This implied a range of control premiums of 17.0 % to 29.1 %.
+Added: This range of control premiums fell below the control premiums observed in the last five years in the communications equipment industry.
+Added: As a result, the market capitalization reconciliation analysis proved support for the reasonableness of the fair values estimated for each individual reporting unit.
+Added: During the fourth quarter of fiscal 2020, we assessed various qualitative factors to determine whether or not an additional goodwill impairment assessment was required as of September 30, 2020, and we concluded that no additional impairment assessment was required.
+Added: Assumptions and estimates to determine fair values under the income and market approaches are complex and often subjective.
+Added: They can be affected by a variety of factors.
+Added: These include external factors such as industry and economic trends.
+Added: They also include internal factors such as changes in our business strategy and our internal forecasts.
+Added: Changes in circumstances or a potential event could negatively affect the estimated fair values.
+Added: We will continue to monitor potential COVID-19 industry and demand impacts as this could potentially affect our cash flows and market capitalization.
+Added: If our future operating results do not meet current forecasts or if we experience a sustained decline in our market capitalization that is determined to be indicative of a reduction in fair value of one or more of our reporting units, we may be required to record future impairment charges for goodwill.
Contingent Consideration
5 unchanged sentences
In general, we warrant our hardware products to be free from defects in material and workmanship under normal use and service.
−Removed: The warranty periods generally range from one to five years.
+Added: The warranty periods generally range from one year to five years .
We typically have the option to either repair or replace hardware products we deem defective with regard to material or workmanship.
−Removed: Estimated warranty costs are accrued in the period that the related revenue is recognized based upon an estimated average per unit repair or replacement cost applied to the estimated number of units under warranty.
+Added: Estimated warranty costs are accrued in the period that the related revenue is recognized based upon an estimated average per unit repair or replacement cost applied to
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Added: the estimated number of units under warranty.
These estimates are based upon historical warranty incidents and are evaluated on an ongoing basis to ensure the adequacy of the warranty accrual.
6 unchanged sentences
Treasury stock may be acquired from employees for tax withholding purposes related to vesting of restricted stock awards as part of our stock-based compensation program.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
7 unchanged sentences
Hardware Product Revenue and SmartSense by Digi ® Equipment Revenue and Associated Installation Fees
−Removed: Our hardware product revenue is derived primarily from the sale of wired and wireless hardware products to our distributors and Direct/OEM customers.
+Added: Our hardware product revenue is derived primarily from the sale of wired and wireless hardware products to our distributors and direct/original equipment manufacturer (“Direct/OEM”) customers.
Product revenue generally is recognized upon shipment of the product to a customer.
Sales to authorized domestic distributors and Direct/OEM customers typically are made with certain rights of return and price adjustment provisions.
−Removed: Estimated reserves for future returns and pricing adjustments are established by us based on an analysis of historical patterns of returns and price adjustments as well as an analysis of authorized returns compared to received returns and distribution sales for the current period.
−Removed: Estimated reserves for future returns and price adjustments are charged against revenue in the same period as the corresponding sales are recorded.
−Removed: Material differences between the historical trends used to determine estimated reserves and actual returns and pricing adjustments could result in a material change to our consolidated results of operations or financial position.
−Removed: We have applied consistent methodologies for estimating reserves for future returns and pricing adjustments for all periods presented.
−Removed: Equipment revenue from SmartSense by Digi ™ within our IoT Solutions segment is recorded as an up-front sale at its stand-alone selling price.
−Removed: This is because the customer could utilize our equipment with other monitoring services or could use our monitoring services with hardware purchased from other vendors.
−Removed: Our installation charges from these sales are recorded when the product is installed.
+Added: Estimated reserves for future credit returns and pricing adjustments are established based on an analysis of historical patterns of credit returns and price adjustments compared to received credit returns and distribution sales for the current period.
+Added: Estimated reserves for future credit returns and price adjustments are charged against revenue in the same period as the corresponding sales are recorded.
+Added: Material differences between the historical trends used to determine estimated reserves and actual credit returns and pricing adjustments could result in a material change to our consolidated results of operations or financial position.
+Added: Estimated sales returns for our distributor stock rotation program are accounted for under the guidance of ASC 845 Nonmonetary Transactions .
+Added: Equipment revenue from SmartSense by Digi ® within our IoT Solutions segment is recognized upon shipment of the equipment to a customer.
+Added: Installation service charges from these sales are recorded when the product is installed.
Subscription and Support Services Revenue
−Removed: Our SmartSense by Digi ™ subscription revenue is recorded on a monthly basis.
−Removed: These subscriptions are generally in a range from one to five years, and may contain an evergreen renewal provision.
−Removed: Generally, our subscription renewal charges per month are the same as the original contract term.
−Removed: We also derive service revenue from our Digi Remote Manager ® , a platform-as-a-service (“PaaS”) offering, whereby customers pay for services consumed based on the number of devices being managed or monitored.
+Added: We derive service revenue from our Digi Remote Manager ® , a platform-as-a-service (“PaaS”) offering, whereby customers pay for services consumed based on the number of devices being managed or monitored.
This revenue is recognized over the life of the service term and is included in our IoT Products & Services segment.
1 unchanged sentence
Some of Digi Support Services revenue is for training and this revenue is recognized as the services are performed.
+Added: Our SmartSense by Digi ® subscription revenue is recorded on a monthly basis.
+Added: These subscriptions are generally in a range from one year to five years , and may contain an evergreen renewal provision.
+Added: Generally, our subscription renewal charges per month are the same as the original contract term.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Professional Services Revenue
5 unchanged sentences
Our SmartSense by Digi ® revenues typically are derived from contracts with multiple performance obligations.
−Removed: These obligations
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Added: These obligations may include:
delivery of monitoring equipment that the customer either purchases out-right or uses while we retain ownership, monitoring services, providing condition alerts of assets being monitored, and recertification of sensor equipment.
20 unchanged sentences
Foreign Currency Translation
−Removed: Financial position and results of operations of our international subsidiaries are measured using local currencies as the functional currency, except our Singapore location which uses the U.S.
−Removed: Dollar as its functional currency.
+Added: Financial position and results of operations of our international subsidiaries are measured using local currencies as the functional currency.
Assets and liabilities of these operations are translated at the exchange rates in effect at the end of each reporting period.
−Removed: For our larger international subsidiaries, statements of operations accounts are translated at the daily rate.
−Removed: For all other international subsidiaries, our statements of operations accounts are translated at the weighted average rates of exchange prevailing during each reporting period.
+Added: For our international subsidiaries, our statements of operations accounts are translated at the weighted average rates of exchange prevailing during each reporting period.
Translation adjustments arising from the use of differing currency exchange rates from period to period are included in accumulated other comprehensive loss in stockholders’ equity.
Gains and losses on foreign currency exchange transactions, as well as translation gains or losses on transactions denominated in currencies other than an entity’s functional currency, are reflected in the statement of operations.
−Removed: During fiscal 2019 , 2018 and 2017 there were net transaction gains of $0.4 million , $0.1 million and $0.1 million , respectively that were recorded in other income, net.
+Added: During fiscal 2020, 2019 and
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Added: 2018 there were net transaction (losses) gains of $( 0.6 ) million, $ 0.4 million and $ 0.1 million, respectively that were recorded in other income, net.
We manage our net asset or net liability position for U.S.
4 unchanged sentences
These items are charged or credited to the accumulated other comprehensive loss account in stockholders’ equity.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net Income Per Common Share
6 unchanged sentences
Fiscal year ended September 30,
−Removed: (as adjusted)*
−Removed: (as adjusted)*
+Added: 2020 2019 2018
+Added: Net income $ 8,411 $ 9,958 $ 1,631
Denominator basic net income per common share — weighted average shares outstanding 28,849 27,905 27,083
4 unchanged sentences
Net income per common share, diluted $ 0.28 $ 0.35 $ 0.06
−Removed: *Prior period information has been restated for the adoption of ASU No.
−Removed: 2014-09, “ Revenue from Contracts with Customers (Topic 606) ”, which we adopted on October 1, 2018.
Because their effect would be anti-dilutive at period end, certain potentially dilutive shares related to stock options to purchase common shares were excluded in the above computation of diluted earnings per share because the options’ exercise prices were greater than the average market price of our common shares.
1 unchanged sentence
Recent Accounting Developments
−Removed: In May 2017, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2017-09, Compensation-Stock Compensation (Topic 718):
−Removed: Scope of Modification Accounting .
−Removed: This ASU provided guidance as to which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting.
−Removed: The amendments in this update are to be applied prospectively to an award modified on or after the adoption date.
−Removed: This ASU was adopted by us on October 1, 2018 and has not had an impact on our consolidated financial statements.
−Removed: In January 2017, FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350):
−Removed: Simplifying the Test for Goodwill Impairment .
−Removed: This ASU eliminates the second step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill.
−Removed: Instead, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to the reporting unit.
−Removed: The standard, which should be applied prospectively, is effective for our fiscal year ending September 30, 2021.
−Removed: Early adoption is permitted.
−Removed: This ASU was adopted by us on October 1, 2018 and has not had an impact on our consolidated financial statements.
−Removed: In August 2016, FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments .
−Removed: This ASU provides guidance on eight specific cash flow issues, thereby reducing the diversity in practice in
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
−Removed: how certain transaction are classified in the statement of cash flows.
−Removed: This ASU was adopted by us on October 1, 2018 and has not had an impact on our consolidated financial statements.
−Removed: In January 2016, FASB issued ASU 2016-01, Financial Instruments - Overall:
−Removed: Recognition and Measurement of Financial Assets and Financial Liabilities .
−Removed: This ASU requires equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) to be measured at fair value with changes in fair value to be recognized in net income.
−Removed: This ASU also simplifies the impairment assessment of equity investments without readily determinable fair values.
−Removed: This ASU also has changed the presentation and disclosure requirements for financial instruments.
−Removed: In addition, this ASU has clarified the guidance related to valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities.
−Removed: This ASU was adopted by us on October 1, 2018 and has not had an impact on our consolidated financial statements.
−Removed: In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”) .
−Removed: This ASU requires that revenue is recognized for the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services.
−Removed: It also establishes timing associated with recognizing revenues and amortizing costs, associated with contracts.
−Removed: FASB has issued several amendments to ASU 2014-09, including clarifications on disclosure of prior-period performance obligations and remaining performance obligations.
−Removed: The guidance permits two methods of adoption, one of which is to retrospectively adjust results for each prior reporting period presented.
−Removed: We elected to adopt the standard using this method effective October 1, 2018.
−Removed: We have described how we recognize revenue in the aforementioned revenue recognition policy.
−Removed: Relative to the amortization of costs there are two impacts to our financial statements.
−Removed: First, in instances where we retain ownership of equipment a customer uses, we charge an implementation fee to the customer so they can begin using the equipment.
−Removed: We depreciate this cost of the equipment over its useful life (typically three years).
−Removed: Second, we capitalize and amortize commissions paid to sales personnel or agents on service contracts.
−Removed: If the commissions earned during an accounting period exceed our capitalization threshold, they will be amortized over the calculated average expected life of the pool of contracts closed during that period.
−Removed: To ease our transition in the adoption of Topic 606, we have elected the following practical expedients outlined in the new accounting guidance:
−Removed: we have not disclosed the remaining transaction price for reporting periods prior to the first quarter of fiscal 2019;
−Removed: for completed contracts that have variable consideration, we will use the as-invoiced amount for all of our time and materials contracts and contracts relating to Digi Remote Manager ® in instances where the contracts do not include free service;
−Removed: we will expense incremental costs of obtaining a contract when incurred if the amortization period of the asset is one year or less.
−Removed: As follows, the adoption of the standard related to the new revenue recognition impacted our reported results:
−Removed: Fiscal year ended September 30, 2018
−Removed: (in thousands, except per common share data)
−Removed: Impact of Adoption*
−Removed: Cost of sales
−Removed: Operating expenses
−Removed: Operating income
−Removed: Diluted earnings per share
−Removed: *The impact of the adoption of ASU 2014-09 solely impacts the results of our IoT Solutions segment.
+Added: In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) , which provides for comprehensive changes to lease accounting.
+Added: The standard requires that a lessee recognize a lease obligation liability and a right-to-use asset for virtually all leases, subsequently amortized over the lease term.
+Added: We adopted this standard in the first quarter of fiscal 2020, following the modified retrospective application approach that applies the new standard to all applicable leases existing at the date of initial application and not restating comparative periods.
+Added: We have completed our implementation efforts.
+Added: These efforts included identification and analysis of our lease portfolio, analysis and evaluation of the new reporting and disclosure requirements of the new guidance, and an evaluation of our lease-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
−Removed: Fiscal year ended September 30, 2017
−Removed: (in thousands, except per common share data)
−Removed: Impact of Adoption*
−Removed: Cost of sales
−Removed: Operating expenses
−Removed: Operating income
−Removed: Diluted earnings per share
−Removed: *The impact of the adoption of ASU 2014-09 solely impacts the results of our IoT Solutions segment.
−Removed: September 30, 2018
−Removed: (in thousands)
−Removed: Impact of Adoption
−Removed: Accounts receivable, net
−Removed: Property, equipment and improvements, net
−Removed: Deferred tax assets
−Removed: Unearned revenue current
−Removed: Other non-current liabilities
−Removed: Retained earnings
−Removed: September 30, 2017
−Removed: (in thousands)
−Removed: Impact of Adoption
−Removed: Accounts receivable, net
−Removed: Property, equipment and improvements, net
−Removed: Deferred tax assets
−Removed: Unearned revenue current
−Removed: Other non-current liabilities
−Removed: Retained earnings
−Removed: We recognized $0.2 million reduction to retained earnings as of September 30, 2016 related to the adoption of the new accounting standards related to revenue recognition.
−Removed: There was no impact to total cash provided by or used in operating, financing or investing on our Consolidated Statements of Cash Flows as a result of our adoption of these new accounting standards.
+Added: related processes and internal controls.
+Added: The adoption of this standard resulted in the recognition of a right-of-use asset included in other non-current assets of approximately $ 14.1 million.
+Added: It also resulted in a lease liability of approximately $ 17.9 million
+Added: included in other current liabilities and other non-current liabilities.
+Added: Both of these were recorded on our Consolidated Balance Sheet in the first quarter of fiscal 2020.
+Added: In adopting the new standard, we elected the package of practical expedients permitted under the transition guidance, as well as the practical expedient not to separate non-lease components from lease components.
+Added: We also elected the practical expedient to use hindsight in determining the lease term when considering options to extend or terminate a lease, options to purchase the underlying asset, and in assessing the impairment of right-of-use assets.
+Added: The adoption of this standard did not have a significant impact on our Consolidated Statements of Operations or Consolidated Statements of Cash Flows.
+Added: We have identified new and updated existing internal controls and processes to support measurement, recognition and disclosure under this new standard.
+Added: Such changes were not deemed to be material to our overall system of internal control over financial reporting.
Not Yet Adopted
+Added: In August 2018, FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820).
+Added: The updated guidance changes the disclosure requirements on fair value measurements.
+Added: We will adopt this standard in the first quarter of fiscal 2021.
+Added: We do not expect this standard to have a material impact on our consolidated financial statements.
In June 2016, FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments .
−Removed: This ASU replaces the incurred loss impairment methodology in current U.S.
+Added: The amendments in this update replace the incurred loss impairment methodology in current U.S.
GAAP with a methodology that reflects expected credit losses.
This update is intended to provide financial statement users with more decision-useful information about the expected credit losses.
−Removed: This ASU is effective for us in the first quarter ending December 31, 2020.
−Removed: Entities may early adopt beginning after December 15, 2018.
−Removed: We are evaluating the impact of adopting ASU 2016-13 on our consolidated financial statements.
−Removed: In February 2016, FASB issued ASU 2016-02, Leases (Topic 842) , which provides for comprehensive changes to lease accounting.
−Removed: This ASU requires that a lessee recognize a lease obligation liability and a right-to-use asset for virtually all leases, subsequently amortized over the lease term.
−Removed: We adopted this standard in the first quarter of fiscal 2020, following the modified retrospective application approach.
−Removed: We are substantially complete with our implementation efforts, which have included identification and analysis of our lease portfolio, analysis and evaluation of the new reporting and disclosure requirements of
+Added: We will adopt this standard in the first quarter of fiscal 2021, following the modified-retrospective approach.
+Added: We do not expect this standard to have a material impact on our consolidated financial statements.
+Added: Fiscal 2020 Acquisition
+Added: Acquisition of Opengear, Inc.
+Added: On December 13, 2019, we completed our acquisition of Opengear, Inc.
+Added: ("Opengear"), a New Jersey-based provider of secure IT infrastructure products and software.
+Added: Opengear results are included in our consolidated financial statements within our IoT Products & Services segment.
+Added: The terms of the acquisition included an upfront cash payment as well as contingent consideration comprised of future earn-out payments.
+Added: We funded the closing of the acquisition with cash of $ 148.1 million comprised of cash on hand and proceeds from our credit facility (see Note 8 to the consolidated financial statements).
+Added: The earn-out payments are based on revenue performance from Opengear for the twelve-month periods ended December 31, 2019 and ending December 31, 2020.
+Added: The cumulative amount of these earn-outs for the periods ended December 31, 2019 and December 31, 2020, will not exceed $ 5.0 million and $ 10.0 million, respectively.
+Added: We paid the first installment of $ 0.9 million for the period ended December 31, 2019 during the third quarter of fiscal 2020.
+Added: The fair value of the remaining contingent consideration was $ 4.2 million at September 30, 2020 (see Note 8 to the consolidated financial statements).
+Added: For tax purposes, this acquisition is treated as a stock acquisition.
+Added: The goodwill therefore is not deductible.
+Added: We believe this is a complementary acquisition for us as it significantly enhances our IoT Products & Services segment by providing secure, resilient access and automation to critical IT infrastructure.
+Added: The Opengear acquisition has been accounted for using the acquisition method of accounting.
+Added: This requires, among other things, that assets acquired and liabilities assumed pursuant to the purchase agreement be recognized at fair value as of the acquisition date.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
−Removed: the new guidance, and an evaluation of our lease-related processes and internal controls.
−Removed: The adoption of this standard will result in reflecting a right-of-use asset and lease liability on our consolidated balance sheet in the first quarter of fiscal 2020 of approximately $14.1 million and $17.9 million , respectively.
−Removed: In adopting the new standard, we elected the package of practical expedients permitted under the transition guidance, as well as the practical expedient not to separate non-lease components from lease components.
−Removed: We do not expect this standard to have a significant impact on our consolidated results of operations or consolidated statements of cash flows.
−Removed: We have identified new and updated existing internal controls and processes to support measurement, recognition and disclosure under this new standard.
−Removed: Such changes were not deemed to be material to our overall system of internal controls.
+Added: ACQUISITIONS (CONTINUED)
+Added: The following table summarizes the final fair values of Opengear assets acquired and liabilities assumed as of the acquisition date (in thousands):
+Added: Cash $ 148,058
+Added: Contingent consideration 5,100
+Added: Total $ 153,158
+Added: Fair value of net tangible assets acquired $ 19,217
+Added: Identifiable intangible assets:
+Added: Customer relationships 79,000
+Added: Purchased and core technology 18,100
+Added: Trademarks 8,000
+Added: Deferred tax liability on identifiable intangible assets ( 27,401 )
+Added: Goodwill 56,242
+Added: Total $ 153,158
+Added: The Consolidated Balance Sheet as of September 30, 2020 reflects the final allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition.
+Added: Included in the fair value of net tangible assets acquired are $ 1.4 million of right-of-use assets included in other non-current assets and $ 1.7 million of lease liability included in other current and non-current liabilities associated with Opengear's operating leases.
+Added: The weighted average useful life for all the identifiable intangibles listed above is estimated to be 13.4 years.
+Added: For purposes of determining fair value, the existing customer relationships identified above are assumed to have a useful life of 14.5 years, purchased and core technology is assumed to have useful life of 9.0 years and trademarks are assumed to have a useful life of 12.0 years.
+Added: Useful lives for identifiable intangible assets are estimated at the time of acquisition based on the periods of time from which we expect to derive benefits from the identifiable intangible assets.
+Added: The identifiable intangible assets are amortized using the straight-line method.
+Added: This reflects the pattern in which the assets are expected to be consumed.
+Added: Costs directly related to the acquisition of $ 0.3 million incurred in the fourth quarter of fiscal 2019 and $ 2.7 million incurred in fiscal 2020 have been charged directly to operations and are included in general and administrative expenses in our Consolidated Statements of Operations.
+Added: These acquisition costs include legal, accounting, integration, valuation and investment banking fees.
+Added: The following consolidated pro forma information is presented as if the acquisition had occurred on October 1, 2018 (in thousands):
+Added: Fiscal year ended September 30,
+Added: Net sales $ 294,167 $ 308,986
+Added: Net income $ 14,366 $ 10,417
+Added: Net income per share - basic $ 0.50 $ 0.37
+Added: Net income per share - diluted $ 0.49 $ 0.36
+Added: Pro forma net income has been adjusted to include interest expense related to debt incurred as a result of the acquisition as well as amortization on the fair value of the intangibles acquired.
+Added: It also has been adjusted to assume the acquisition-related costs of $ 3.1 million were incurred as of the first quarter of fiscal 2019.
+Added: Given the success of our efforts to rapidly integrate the workforce, customer offerings, technology, and reporting capabilities of Opengear with that of our other components in our IoT Products & Services business, along with the inherent complementary synergies gained from doing so, it is impractical for us to present Opengear specific results otherwise required by GAAP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: ACQUISITIONS (CONTINUED)
Fiscal 2018 Acquisitions
Acquisition of Accelerated Concepts, Inc.
−Removed: On January 22, 2018, we purchased all the outstanding stock of Accelerated, a Tampa-based provider of secure, enterprise-grade, cellular (LTE) networking equipment for primary and backup connectivity applications, for cash of $16.4 million (excluding cash acquired of $0.2 million ) and future earn-out payments.
+Added: On January 22, 2018, we purchased all the outstanding stock of Accelerated Concepts, Inc.
+Added: ("Accelerated"), a Tampa-based provider of secure, enterprise-grade, cellular (LTE) networking equipment for primary and backup connectivity applications, for cash of $ 16.4 million (excluding cash acquired of $ 0.2 million) and future earn-out payments.
Purchase accounting related to the acquisition of Accelerated was finalized during the fourth quarter of fiscal 2018.
−Removed: The earn-out payments are scheduled to be paid in two installments and the payment amount, if any, will be calculated based on the revenue performance of Accelerated products.
−Removed: The first installment was based on revenues from January 22, 2018 through January 21, 2019 and the second installment will be based on revenues from January 22, 2019 through January 21, 2020.
−Removed: If certain revenue thresholds are met, the cumulative amount of these earn-outs will be $6.5 million .
+Added: The earn-out payments were scheduled to be paid in two installments and the payment amount, if any, was to be calculated based on the revenue performance of Accelerated products.
+Added: The first installment was based on revenues from January 22, 2018 through January 21, 2019 and the second installment was based on revenues from January 22, 2019 through January 21, 2020.
+Added: If certain revenue thresholds were met, the cumulative amount of these earn-outs could have been $ 6.5 million.
In April 2019, we paid $ 3.5 million for the first installment.
−Removed: The fair value of the remaining contingent consideration was $2.5 million at September 30, 2019 (see Note 8 to the consolidated financial statements).
−Removed: For the year ended September 30, 2018, the amounts of revenue and net income included in the Consolidated Statements of Operations from the acquisition date of January 22, 2018 were $22.2 million and $2.8 million , respectively.
−Removed: Costs directly related to the acquisition of $0.3 million incurred in fiscal 2018 have been charged directly to operations and are included in general and administrative expense in our Consolidated Statements of Operations.
−Removed: These acquisition costs include legal, accounting and valuation fees.
+Added: In April 2020, we paid $ 2.4 million for the remaining contingent consideration (see Note 8 to the consolidated financial statements).
Acquisition of TempAlert LLC
−Removed: On October 20, 2017, we purchased all the outstanding interests of TempAlert, a Boston-based provider of automated, real-time temperature monitoring and task management solutions for cash of $40.7 million (excluding cash acquired of $0.6 million ) and future earn-out payments.
+Added: On October 20, 2017, we purchased all the outstanding interests of TempAlert LLC ("TempAlert"), a Boston-based provider of automated, real-time temperature monitoring and task management solutions for cash of $ 40.7 million (excluding cash acquired of $ 0.6 million) and future earn-out payments.
Purchase accounting related to the acquisition was finalized during the first quarter of fiscal 2019.
−Removed: The first earn-out payment was scheduled to be paid after December 31, 2018 and the second earn-out payment is scheduled to be paid after December 31, 2019, which is the end of the earn-out periods.
−Removed: No payment was earned for the period ended December 31, 2018.
−Removed: The cumulative amount of the remaining earn-outs for the period ended December 31, 2019, will not exceed $45.0 million .
−Removed: The fair value of the contingent consideration was zero at September 30, 2019 (see Note 8 to the consolidated financial statements).
−Removed: For the year ended September 30, 2018, the amount of revenue included in the Consolidated Statements of Operations from the acquisition date of October 20, 2017 was $17.0 million .
−Removed: Costs directly related to the acquisition of $1.1 million , $1.4 million and $0.4 million incurred in fiscal years 2019, 2018 and 2017, respectively, have been charged directly to operations and are included in general and administrative expense in our Consolidated Statements of Operations.
−Removed: These acquisition costs include legal, accounting, valuation and success fees.
−Removed: Fiscal 2017 Acquisitions
−Removed: Acquisition of SMART Temps ® , LLC
−Removed: On January 9, 2017, we purchased all of the outstanding interests of SMART Temps ® , LLC ("SMART Temps ® "), an Indiana-based provider of real-time temperature management for pharmacies, education, and hospital settings as well as real-time
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: ACQUISITIONS (CONTINUED)
−Removed: temperature management for blood bank, laboratory environments, restaurants, and grocery for cash of $28.8 million (excluding cash acquired of $0.5 million ) and future earn-out payments.
−Removed: SMART Temps ® results have been included in our consolidated financial statements within the IoT Solutions segment since the date of acquisition.
−Removed: Purchase accounting related to the acquisition was finalized during fiscal 2017.
−Removed: The earn-out payments were scheduled to be paid after December 31, 2017 which is the end of the earn-out period.
−Removed: The cumulative amount of those earn-out payments could not exceed $7.2 million .
−Removed: The fair value of this contingent consideration was zero at December 31, 2017 and no earn-out was paid (see Note 8 to the consolidated financial statements).
−Removed: Acquisition of FreshTemp ® , LLC
−Removed: On November 1, 2016, we purchased all of the outstanding interests of FreshTemp ® , LLC ("FreshTemp ®" ), a Pittsburgh-based provider of temperature monitoring and automated task management solutions for the food industry for cash of $1.7 million and future earn-out payments.
−Removed: FreshTemp ® results have been included in our consolidated financial statements within the IoT Solutions segment since the date of acquisition.
−Removed: Purchase accounting related to the acquisition was finalized during fiscal 2017.
−Removed: The earn-out payments were based on revenue related to certain customer contracts entered into by June 30, 2017.
−Removed: The final calculation date was on June 30, 2018.
−Removed: The cumulative amount of these earn-out payments could not exceed $2.3 million .
−Removed: We made a final payment of $0.2 million during the first quarter of fiscal 2019.
+Added: The first earn-out payment was scheduled to be paid after December 31, 2018 and the second earn-out payment was scheduled to be paid after December 31, 2019, which was the end of the earn-out periods.
+Added: No payment was earned for the periods ended December 31, 2018 or December 31, 2019.
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS, NET
1 unchanged sentence
Amortizable identifiable intangible assets, net as of September 30, 2020 and 2019 were comprised of the following (in thousands):
−Removed: September 30, 2019
−Removed: September 30, 2018
+Added: September 30, 2020 September 30, 2019
+Added: amount Accum.
+Added: amount Accum.
Purchased and core technology $ 76,011 $ ( 55,482 ) $ 20,529 $ 57,699 $ ( 50,986 ) $ 6,713
4 unchanged sentences
Order backlog — — — 1,800 ( 1,800 ) —
+Added: Total $ 225,059 $ ( 103,811 ) $ 121,248 $ 121,093 $ ( 90,426 ) $ 30,667
Amortization expense is included in our Consolidated Statements of Operations in cost of sales and general and administrative expense.
1 unchanged sentence
Amortization expense for fiscal years 2020, 2019 and 2018 was as follows (in thousands):
+Added: Fiscal year Total
+Added: 2020 $ 14,754
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 unchanged sentence
Estimated amortization expense for the next five years is as follows (in thousands):
+Added: Fiscal year Total
+Added: 2021 $ 15,558
+Added: 2022 $ 14,714
+Added: 2023 $ 12,518
+Added: 2024 $ 11,815
The changes in the carrying amount of goodwill by reportable segments are (in thousands):
−Removed: Fiscal years ended September 30,
−Removed: Products and Services
+Added: Products & Services IoT
+Added: Solutions Total
Balance on September 30, 2018 $ 104,358 $ 50,177 $ 154,535
1 unchanged sentence
Balance on September 30, 2019 $ 103,519 $ 49,903 $ 153,422
+Added: Acquisition 56,242 — 56,242
Foreign currency translation adjustment 604 ( 133 ) 471
6 unchanged sentences
The qualitative information included, but was not limited to, the following:
−Removed: the nature of the products and services and customers differ between the two segments, the Chief Operating Decision Maker is reviewing both segments’ operating results separately and makes decisions about the allocation of resources, and discrete financial information is available through operating income (loss) for both segments.
+Added: the nature of the products and services and customers differ between the two segments, discrete financial information is available through gross profit for both segments and the Chief Operating Decision Maker is reviewing both segments’ financial information (through gross profit) separately to make decisions about the allocation of resources.
IoT Products & Services
Our IoT Products & Services segment is composed of the following communications products and development services:
−Removed: Cellular routers and gateways;
−Removed: Radio frequency ("RF") products which include our Digi XBee ® modules as well as other RF solutions;
−Removed: Embedded products which include Digi Connect ® and Rabbit ® embedded systems on module and single board computers;
−Removed: Network products which include console and serial servers and USB connected products;
+Added: • Cellular routers;
+Added: • OEM Solutions which include Radio frequency ("RF") products which include our Digi XBee ® Networking solutions as well as other RF solutions, embedded products which include Digi Connect ® , ConnectCore ® and Rabbit ® embedded systems on module and single board computers;
+Added: • Infrastructure management products which include console and serial servers and USB connected products;
+Added: • Console Servers which is comprised of our Network Resilience Platform and includes Smart Out-of-Band and NetOps Console Servers managed by our Lighthouse software.
• Digi Wireless Design Services;
6 unchanged sentences
These solutions are focused on these vertical markets:
−Removed: food service, retail, healthcare (primarily pharmacies), transportation/logistics and education.
+Added: food service, healthcare (primarily pharmacies) and supply chain.
The solutions are marketed as SmartSense by Digi ® .
We have formed, expanded and enhanced the IoT Solutions segment through acquisition.
−Removed: We measure our segment results primarily by reference to revenue and operating income.
+Added: We measure our segment results primarily by reference to revenue and gross profit.
IoT Solutions revenue includes product, service and subscription revenue.
−Removed: Certain costs incurred at the corporate level are allocated to our segments.
−Removed: These costs include information technology, employee benefits and shared facility services.
−Removed: 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):
−Removed: Fiscal years ended September 30,
−Removed: (as adjusted)*
−Removed: (as adjusted)*
+Added: Fiscal year ended September 30,
+Added: 2020 2019 2018
IoT Products & Services $ 249,530 $ 215,287 $ 201,506
1 unchanged sentence
Total revenue $ 279,271 $ 254,203 $ 226,893
−Removed: Operating income (loss)
IoT Products & Services $ 129,349 $ 100,522 $ 97,895
IoT Solutions 14,623 18,513 11,159
−Removed: Total operating income
+Added: Total gross profit $ 143,972 $ 119,035 $ 109,054
Depreciation and amortization
2 unchanged sentences
Total depreciation and amortization $ 19,299 $ 13,396 $ 12,784
−Removed: *Prior period information has been restated for the adoption of ASU No.
−Removed: 2014-09, “ Revenue from Contracts with Customers (Topic 606) ”, which we adopted on October 1, 2018.
Total expended for property, plant and equipment was as follows (in thousands):
−Removed: Fiscal years ended September 30,
+Added: Fiscal year ended September 30,
+Added: 2020 2019 2018
IoT Products & Services $ 878 $ 8,863 $ 1,773
3 unchanged sentences
As of September 30,
−Removed: (as adjusted)*
IoT Products & Services $ 387,578 $ 215,651
1 unchanged sentence
Unallocated* 54,129 92,792
−Removed: *Prior period information has been restated for the adoption of ASU No.
−Removed: 2014-09, “ Revenue from Contracts with Customers (Topic 606) ”, which we adopted on October 1, 2018.
−Removed: **Unallocated consists of cash and cash equivalents, current marketable securities and long-term marketable securities.
+Added: Total assets $ 528,682 $ 398,698
+Added: *Unallocated consists of cash and cash equivalents.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2 unchanged sentences
As of September 30,
−Removed: (as adjusted)*
United States $ 11,297 $ 13,400
1 unchanged sentence
Total net property, equipment and improvements $ 11,507 $ 13,857
−Removed: *Prior period information has been restated for the adoption of ASU No.
−Removed: 2014-09, “ Revenue from Contracts with Customers (Topic 606) ”, which we adopted on October 1, 2018.
export sales represented 25.1 %, 28.5 % and 30.1 % of revenue for the fiscal years ended September 30, 2020, 2019 and 2018.
5 unchanged sentences
The sale price was $ 10.0 million in cash adjusted for certain selling costs and an escrow for the leaseback of the building for four months.
−Removed: At September 30, 2018 the net book value of the land, building and improvements was $5.2 million and listed as assets held for sale on our Consolidated Balance Sheet.
−Removed: As a result, we recorded a $1.1 million tax benefit in the fourth quarter of fiscal 2018 because we were able to use credit loss carryforwards which previously had a valuation allowance.
As a result of this sale, we recorded a gain of $ 4.4 million ($ 3.4 million net of tax) in the first quarter of fiscal 2019, which is recorded in general and administrative expense.
1 unchanged sentence
These improvements are being depreciated over 10 years, which is the estimated useful life of the improvements.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SELECTED BALANCE SHEET DATA (in thousands)
As of September 30,
−Removed: (as adjusted)*
Accounts receivable, net:
1 unchanged sentence
Less allowance for doubtful accounts 3,778 968
−Removed: Less reserve for future returns and pricing adjustments
+Added: Less reserve for future credit returns and pricing adjustments 2,022 2,677
Total accounts receivable, net $ 59,227 $ 56,417
4 unchanged sentences
Property, equipment and improvements, net:
+Added: Land $ 570 $ 570
+Added: Buildings 2,338 2,338
+Added: Improvements 7,844 7,646
+Added: Equipment 17,153 17,440
Purchased software 3,770 4,030
4 unchanged sentences
Total property, equipment and improvements, net $ 11,507 $ 13,857
−Removed: *Prior period information has been restated for the adoption of ASU No.
−Removed: 2014-09, “ Revenue from Contracts with Customers (Topic 606) ”, which we adopted on October 1, 2018.
−Removed: At September 30, 2018 there was $5.2 million of assets held for sale on our Consolidated Balance Sheet, which consisted of land, buildings and improvements related to our former Minnetonka, Minnesota headquarters.
−Removed: On October 2, 2018, we sold this facility to Minnetonka Leased Housing Associates II, LLLP (see Note 5 to our consolidated financial statements).
−Removed: MARKETABLE SECURITIES
−Removed: Our marketable securities historically consist of certificates of deposit, commercial paper, corporate bonds and government municipal bonds.
−Removed: At September 30, 2019 we did not hold any marketable securities.
−Removed: At September 30, 2018 our marketable securities were (in thousands):
−Removed: Fair Value (1)
−Removed: Current marketable securities:
−Removed: Certificates of deposit
−Removed: Total marketable securities
−Removed: Included in amortized cost and fair value is purchased and accrued interest of $6 .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: MARKETABLE SECURITIES (CONTINUED)
−Removed: The following table shows the fair values and gross unrealized losses of our available-for-sale securities that have been in a continuous unrealized loss position deemed to be temporary, aggregated by investment category (in thousands):
−Removed: September 30, 2018
−Removed: Less than 12 Months
−Removed: More than 12 Months
−Removed: Unrealized Losses
−Removed: Unrealized Losses
−Removed: Certificates of deposit
FAIR VALUE MEASUREMENTS
7 unchanged sentences
Total carrying
−Removed: September 30, 2019
−Removed: Quoted price in
+Added: September 30, 2020 Quoted price in
active markets
−Removed: Significant other
+Added: (Level 1) Significant other
observable inputs
+Added: (Level 2) Significant
unobservable inputs
−Removed: Total assets measured at fair value
Contingent consideration on acquired business $ 4,228 $ — $ — $ 4,228
2 unchanged sentences
Total carrying
−Removed: September 30, 2018
−Removed: Quoted price in
+Added: September 30, 2019 Quoted price in
active markets
−Removed: Significant other
+Added: (Level 1) Significant other
observable inputs
+Added: (Level 2) Significant
unobservable inputs
−Removed: Certificates of deposit
+Added: Money market $ 56,700 $ 56,700 $ — $ —
Total assets measured at fair value $ 56,700 $ 56,700 $ — $ —
−Removed: Contingent consideration on acquired business
+Added: Contingent consideration on acquired businesses $ 5,407 $ — $ — $ 5,407
Total liabilities measured at fair value $ 5,407 $ — $ — $ 5,407
−Removed: In connection with the October 2015 acquisition of Bluenica, we may be required to make contingent payments over a period of up to four years, subject to achieving specified revenue thresholds for sales of Bluenica products.
−Removed: The fair value of the liability for contingent consideration recognized was $10.4 million upon acquisition and was $2.9 million at September 30, 2019 .
−Removed: We paid $0.5 million in fiscal 2017, no payments in fiscal 2018 and $2.2 million in fiscal 2019.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: FAIR VALUE MEASUREMENTS (CONTINUED)
+Added: In connection with the October 2015 acquisition of Bluenica, we may be required to make contingent payments over a period of up to 4 years, subject to achieving specified revenue thresholds for sales of Bluenica products.
+Added: The fair value of the liability for contingent consideration recognized was $ 10.4 million upon acquisition.
+Added: We paid $ 0.5 million in fiscal 2017, no payments in fiscal 2018, $ 2.2 million in fiscal 2019 and the final installment of $ 2.9 million in fiscal 2020.
In connection with the November 2016 acquisition of FreshTemp ® , we were required to make a contingent payment after June 30, 2018, for revenue related to specific customer contracts signed by June 30, 2017.
2 unchanged sentences
In connection our acquisition of TempAlert, we agreed to make contingent payments for the twelve month periods ending December 31, 2018 and December 31, 2019 based on the total Digi IoT Solutions segment revenue (see Note 2 to the consolidated financial statements).
−Removed: The fair value of the liability for contingent consideration was zero , both upon acquisition and at September 30, 2019 .
+Added: The fair value of the liability for contingent consideration was zero upon acquisition.
+Added: No contingent consideration was earned.
In connection with our acquisition of Accelerated, we agreed to make contingent payments, based upon certain sales thresholds of Accelerated products (see Note 2 to the consolidated financial statements).
−Removed: The fair values of the liability for contingent consideration recognized upon acquisition of Accelerated on January 22, 2018 and at September 30, 2019 were $2.3 million and $2.5 million , respectively.
−Removed: The increase was a result of Accelerated outperforming initial revenue expectations.
−Removed: We made the first installment of $3.5 million in fiscal 2019.
+Added: The fair values of the liability for contingent consideration recognized upon acquisition of Accelerated on January 22, 2018 was $ 2.3 million.
+Added: We paid the first installment of $ 3.5 million in fiscal 2019 and the final installment of $ 2.4 million in the third quarter of fiscal 2020.
+Added: In connection with our acquisition of Opengear, we agreed to make contingent payments, based upon certain revenue thresholds (see Note 2 to the consolidated financial statements).
+Added: We paid the first installment of $ 0.9 million during the third quarter of fiscal 2020.
+Added: The fair value of the remaining liability for contingent consideration for the acquisition of Opengear was $ 4.2 million at September 30, 2020.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: FAIR VALUE MEASUREMENTS (CONTINUED)
The following table presents a reconciliation of the contingent consideration liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):
6 unchanged sentences
The change in fair value of contingent consideration reflects our estimate of the probability of achieving the relevant targets and is discounted based on our estimated discount rate.
−Removed: We have estimated the fair value of the contingent consideration at September 30, 2019 based on the probability of achieving the specified revenue thresholds of 100% for Bluenica, 0% for TempAlert, and a range of 70% to 100% for Accelerated.
−Removed: As of September 30, 2019 , contingent consideration associated with the acquisition of Accelerated remains subject to future performance through January 21, 2020.
+Added: We have estimated the fair value of the contingent consideration at September 30, 2020 based on the probability of achieving the specified revenue thresholds of 72 % for Opengear.
+Added: As of September 30, 2020, contingent consideration associated with the acquisition of Opengear remains subject to future performance through December 31, 2020.
+Added: In connection with our acquisition of Opengear, we entered into a syndicated credit agreement with BMO Harris Bank N.A.
+Added: ("BMO") on December 13, 2019.
+Added: This agreement provides us with committed credit facilities (the "Credit Facility") totaling $ 150 million.
+Added: The Credit Facility includes:
+Added: (i) a $ 50 million term loan (the "Term Loan") and (ii) a $ 100 million revolving loan (the "Revolving Loan").
+Added: Prior to May 4, 2020, borrowings under the Credit Facility bore interest rates based on an underlying variable benchmark plus applicable margin based on our total leverage ("ABR");
+Added: this interest rate was reset quarterly.
+Added: Effective May 4, 2020, borrowings under the Credit Facility bear a variable interest rate of LIBOR plus an applicable margin spread from 3.25 % to 1.25 %.
+Added: The amount of the applicable margin spread is a function of our leverage ratio and is reset monthly.
+Added: In addition to paying interest on the outstanding balance under the Credit Facility, we are required to pay a commitment fee on the non-utilized commitments thereunder which is also reported in interest expense.
+Added: Our weighted average interest rate at September 30, 2020 was 0.7 %.
+Added: We also incurred debt issuance costs under the Credit Facility of $ 2.6 million in the first quarter of fiscal 2020.
+Added: These issuance costs are being amortized using the straight-line method over the term of the loan and reported in interest expense.
+Added: Amounts under the Term Loan will be repaid in quarterly installments on the last day of each fiscal quarter.
+Added: Amortization is 5 % in the first two years, 7.5 % in the next two years and 10 % in the final year.
+Added: The remaining outstanding balance will mature on December 13, 2024.
+Added: The Revolving Loan is due in a lump sum payment at maturity on December 13, 2024.
+Added: The fair values of the Term Loan and Revolving Loan approximated carrying value at September 30, 2020.
+Added: The following table is a summary of our long-term indebtedness at September 30, 2020 (in thousands):
+Added: Revolving loan $ 15,000
+Added: Term loan 48,125
+Added: Total loans 63,125
+Added: Less unamortized issuance costs ( 2,173 )
+Added: Less current maturities of long-term debt ( 1,972 )
+Added: Total long-term debt, net of current portion $ 58,980
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: INDEBTEDNESS (CONTINUED)
+Added: The following table is a summary of future maturities of our aggregate long-term debt at September 30, 2020 (in thousands):
+Added: Total long-term debt $ 63,125
+Added: Covenants and Security Interest
+Added: The agreements governing the Credit Facility contain a number of covenants.
+Added: Among other thing, these covenants require us to maintain certain financial ratios (net leverage ratio and minimum fixed charge ratio).
+Added: At September 30, 2020, we were in compliance with our debt covenants.
+Added: Amounts borrowed under the Credit Facility are secured by substantially all of our assets.
+Added: Paycheck Protection Program Loan
+Added: On April 14, 2020, we were granted a loan for $ 9.0 million under the Paycheck Protection Program ("PPP") established as part of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act").
+Added: Based on our evaluation of additional rules for the PPP established after the grant acceptance, on May 4, 2020 we voluntarily repaid the full amount of the loan of $ 9.0 million, plus interest.
PRODUCT WARRANTY OBLIGATION
The following table summarizes the activity associated with the product warranty accrual (in thousands) and is listed on our Consolidated Balance Sheets within current liabilities:
+Added: Balance at Warranties Settlements Balance at
+Added: Fiscal year October 1 accrued made September 30
+Added: 2020 $ 1,012 $ 666 $ ( 736 ) $ 942
+Added: 2019 $ 1,172 $ 305 $ ( 465 ) $ 1,012
+Added: 2018 $ 987 $ 759 $ ( 574 ) $ 1,172
+Added: All of our leases are operating leases and primarily consist of leases for office space.
+Added: For any lease with an initial term in excess of twelve months, the related lease assets and lease liabilities are recognized on our Consolidated Balance Sheets as either operating or financing leases at the inception of an agreement where it is determined that a lease exists.
+Added: We have lease agreements that contain both lease and non-lease components.
+Added: We have elected to combine lease and non-lease components for all classes of assets.
+Added: Leases with an initial term of twelve months or less are not recorded on our Consolidated Balance Sheets.
+Added: Instead we recognize lease expense for these leases on a straight-line basis over the lease term.
+Added: Operating lease assets represent the right to use an underlying asset for the lease term and operating lease liabilities represent the obligation to make lease payments.
+Added: These assets and liabilities are recognized based on the present value of future payments over the lease term at the commencement date.
+Added: We generally use a collateralized incremental borrowing rate based on information available at the commencement date, including the lease term, in determining the present value of future payments.
+Added: When determining our right-of-use asset, we generally do not include options to extend or terminate the lease unless it is reasonably certain that the option will be exercised.
+Added: Our leases typically require payment of real estate taxes and common area maintenance and insurance.
+Added: These components comprise the majority of our variable lease cost and are excluded from the present value of our lease obligations.
+Added: Fixed payments may contain predetermined fixed rent escalations.
+Added: We recognize the related rent expense on a straight-line basis from the commencement date to the end of the lease term.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: LEASES (CONTINUED)
+Added: The following table shows the supplemental balance sheet information related to our leases (in thousands):
+Added: Balance Sheet Location September 30, 2020
+Added: Operating leases Other non-current assets $ 14,334
+Added: Total lease assets $ 14,334
+Added: Operating leases Other current liabilities $ 2,527
+Added: Operating leases Other non-current liabilities 16,193
+Added: Total lease liabilities $ 18,720
+Added: The following were the components of our lease cost (in thousands):
+Added: Statement of Operations Location Fiscal year ended
+Added: September 30, 2020
+Added: Operating lease cost Cost of goods sold and SG&A $ 3,341
+Added: Variable lease cost Cost of goods sold and SG&A 744
+Added: Short-term lease cost Cost of goods sold and SG&A 175
+Added: Total lease cost $ 4,260
+Added: The following table presents supplemental information related to operating leases (in thousands):
+Added: Fiscal year ended
+Added: September 30, 2020
+Added: Cash paid for amounts included in the measurement of operating lease liabilities $ 2,893
+Added: Right-of-use assets obtained in exchange for new operating lease liabilities $ 1,073
+Added: September 30, 2020
+Added: Weighted average remaining lease term - operating leases 5.6 years
+Added: Weighted average discount rate - operating leases 4.80 %
+Added: The table below reconciles the undiscounted cash flows for each of the first five years as well as all the remaining years to the operating lease liabilities recorded on the Consolidated Balance Sheet as of September 30, 2020 (in thousands):
+Added: Fiscal year Amount
+Added: Thereafter 9,219
+Added: Total future undiscounted lease payments 22,955
+Added: Less imputed interest ( 4,235 )
+Added: Total reported lease liability $ 18,720
+Added: In July 2020, we signed a lease agreement for ten years in Sandy, Utah.
+Added: We have $ 4.8 million of future minimum lease obligations under this new lease for 35,466 square feet of office space.
+Added: Included in this agreement is $ 1.0 million of tenant improvement allowance.
+Added: This agreement is not included on our Consolidated Balance Sheet nor in the above table as the lessor has not made the underlying asset available for use.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: LEASES (CONTINUED)
+Added: As follows, aggregate annual future minimum rental commitments under operating leases with noncancelable terms of more than one year at September 30, 2019 were reported under previous lease accounting standards (in thousands):
+Added: Fiscal year Amount
+Added: Thereafter 11,361
+Added: Total minimum payments required $ 22,997
RESTRUCTURING
+Added: 2020 Restructuring
+Added: In second quarter of fiscal 2020, we recorded and re-aligned our product management group within IoT Products & Services segment and eliminated two employment positions.
+Added: We recorded $ 38 thousand for employee termination charges.
+Added: This was fully paid during the second quarter of fiscal 2020.
+Added: In the third quarter of fiscal 2020, we recorded $ 95 thousand of restructuring for employee termination charges primarily within our IoT Solutions segment.
+Added: This resulted in the elimination of 22 employment positions.
+Added: This restructuring was completed in the fourth quarter of fiscal 2020.
Manufacturing Transition
−Removed: As announced on April 3, 2018, we transferred the manufacturing functions of our Eden Prairie, Minnesota operations facility to existing contract manufacture suppliers.
−Removed: As a result, 53 employment positions in total were eliminated, resulting in restructuring charges amounting to approximately $0.5 million for employee costs during the third and fourth quarters of fiscal 2018.
+Added: As announced in April 2018, we transferred the manufacturing functions of our Eden Prairie, Minnesota operations facility to existing contract manufacture suppliers.
+Added: As a result, 53 employment positions in total were eliminated, resulting in restructuring charges amounting to approximately $ 0.5 million for employee costs during the third and fourth quarters of fiscal 2018 in our IoT Product and Services segment.
The payments associated with these charges were completed in the first half of fiscal 2019.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: RESTRUCTURING (CONTINUED)
2017 Restructuring
2 unchanged sentences
The restructuring was the result of a decision to consolidate our France operations to our Europe, Middle East and Africa ("EMEA") headquarters in Munich.
−Removed: The total restructuring charges amounted to $2.5 million , which included $2.3 million of employee costs and $0.2 million of contract termination costs during the third quarter of fiscal 2017.
+Added: The total restructuring charges amounted to $ 2.5 million in fiscal 2017, which included $ 2.3 million of employee costs and $ 0.2 million of contract termination costs during the third quarter of fiscal 2017 in our IoT Product and Services segment.
These actions resulted in an elimination of 10 employment positions in the U.S.
1 unchanged sentence
The payments associated with these charges were completed during the first half of fiscal 2019.
−Removed: Below is a summary of the restructuring charges and other activity within the restructuring accrual all of which is included in our IoT Products & Services segment (in thousands):
−Removed: Manufacturing Transition
−Removed: 2017 Restructuring
−Removed: Employee Termination Costs
−Removed: Employee Termination Costs
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: RESTRUCTURING (CONTINUED)
+Added: Below is a summary of the restructuring charges and other activity within the restructuring accrual (in thousands):
+Added: 2020 Restructuring Manufacturing Transition 2017 Restructuring
+Added: Employee Termination Costs Employee Termination Costs Employee Termination Costs Other Total
Balance at September 30, 2017 $ — $ — $ 1,528 $ 128 $ 1,656
Restructuring charge — 504 — — 504
+Added: Payments — ( 357 ) ( 1,035 ) ( 161 ) ( 1,553 )
+Added: Reversals — — ( 244 ) 41 ( 203 )
Foreign currency fluctuation — — 44 5 49
Balance at September 30, 2018 $ — $ 147 $ 293 $ 13 $ 453
−Removed: Restructuring charge
+Added: Payments — ( 108 ) ( 233 ) ( 18 ) ( 359 )
+Added: Reversals — ( 39 ) ( 53 ) 5 ( 87 )
Foreign currency fluctuation — — ( 7 ) — ( 7 )
Balance at September 30, 2019 $ — $ — $ — $ — $ —
−Removed: Foreign currency fluctuation
+Added: Restructuring charge 133 — — — 133
+Added: Payments ( 117 ) — — — ( 117 )
+Added: Reversals ( 16 ) — — — ( 16 )
Balance at September 30, 2020 $ — $ — $ — $ — $ —
1 unchanged sentence
The following summarizes our revenue by geographic location of our customers:
−Removed: Fiscal years ended September 30,
+Added: Fiscal year ended September 30,
($ in thousands) 2020 2019 2018
−Removed: (as adjusted)*
−Removed: (as adjusted)*
North America, primarily the United States $ 213,487 $ 184,022 $ 161,924
2 unchanged sentences
Total revenue $ 279,271 $ 254,203 $ 226,893
−Removed: *Prior period information has been restated for the adoption of ASU No.
−Removed: 2014-09, “ Revenue from Contracts with Customers (Topic 606), ” which we adopted on October 1, 2018.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: REVENUE (CONTINUED)
The following summarizes our revenue by the timing of revenue recognition:
−Removed: Fiscal years ended September 30,
+Added: Fiscal year ended September 30,
($ in thousands) 2020 2019 2018
−Removed: (as adjusted)*
−Removed: (as adjusted)*
Transferred at a point in time $ 253,371 $ 231,387 $ 212,448
1 unchanged sentence
Total revenue $ 279,271 $ 254,203 $ 226,893
−Removed: *Prior period information has been restated for the adoption of ASU No.
−Removed: 2014-09, “ Revenue from Contracts with Customers (Topic 606), ” which we adopted on October 1, 2018.
Contract Balances
3 unchanged sentences
In these cases, we retain the ownership of the equipment that the customer uses.
−Removed: The total net book value of subscriber assets was $2.1 million at both September 30, 2019 and September 30, 2018 and is included in property, equipment and improvements, net.
−Removed: Depreciation expense for these subscriber assets was $1.1 million , $0.5 million and $0.1 million for fiscal 2019 , 2018 and 2017 , respectively.
+Added: The total net book value of subscriber assets was $ 2.0 million at September 30, 2020 and $ 2.1 million at September 30, 2019 and is included in property, equipment and improvements, net.
+Added: Depreciation expense for these subscriber assets was
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: REVENUE (CONTINUED)
+Added: $ 1.5 million, $ 1.1 million and $ 0.5 million for fiscal 2020, 2019 and 2018, respectively.
We depreciate the cost of this equipment over its useful life (typically three years ).
4 unchanged sentences
Changes in unearned revenue were:
−Removed: Fiscal year ended
−Removed: September 30,
+Added: Fiscal year ended September 30,
($ in thousands) 2020
Unearned revenue, beginning of period $ 5,025
+Added: Billings 35,213
Revenue recognized ( 30,897 )
Unearned revenue, end of period $ 9,341
−Removed: *Prior period information has been restated for the adoption of ASU No.
−Removed: 2014-09, “ Revenue from Contracts with Customers (Topic 606), ” which we adopted on October 1, 2018.
Remaining Transaction Price
2 unchanged sentences
We expect to recognize revenue on approximately $ 10.0 million of remaining performance obligations over the next twelve months.
−Removed: Revenue from the remaining performance obligations we expect to recognize over a range of two to five years.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: Revenue from the remaining performance obligations we expect to recognize over a range of two years to seven years .
The components of income before income taxes are (in thousands):
Fiscal year ended September 30,
−Removed: (as adjusted)*
−Removed: (as adjusted)*
+Added: 2020 2019 2018
United States $ 3,756 $ 7,981 $ ( 2,427 )
1 unchanged sentence
Income before income taxes $ 7,463 $ 11,145 $ 3,250
−Removed: *Prior period information has been restated for the adoption of ASU No.
−Removed: 2014-09, “ Revenue from Contracts with Customers (Topic 606) ”, which we adopted on October 1, 2018.
−Removed: The components of the income tax provision are (in thousands):
+Added: The components of the income tax (benefit) expense are (in thousands):
Fiscal year ended September 30,
−Removed: (as adjusted)*
−Removed: (as adjusted)*
−Removed: Income tax provision
−Removed: *Prior period information has been restated for the adoption of ASU No.
−Removed: 2014-09, “ Revenue from Contracts with Customers (Topic 606) ”, which we adopted on October 1, 2018.
−Removed: Net deferred tax asset consists of (in thousands):
+Added: 2020 2019 2018
+Added: Federal $ 709 $ 950 $ 526
+Added: State 572 290 57
+Added: Foreign 1,128 746 1,412
+Added: ( 2,911 ) ( 825 ) ( 536 )
+Added: Foreign ( 446 ) 26 160
+Added: Income tax (benefit) expense $ ( 948 ) $ 1,187 $ 1,619
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: INCOME TAXES (CONTINUED)
+Added: Net deferred tax (liability) asset consists of (in thousands):
As of September 30,
−Removed: (as adjusted)*
Non-current deferred tax asset $ 389 $ 7,330
Non-current deferred tax liability ( 17,171 ) ( 261 )
−Removed: Net deferred tax asset
+Added: Net deferred tax (liability) asset $ ( 16,782 ) $ 7,069
Depreciation and amortization $ ( 1,037 ) $ ( 480 )
+Added: Lease asset ( 3,415 ) —
+Added: Lease liability 4,477 —
+Added: Inventories 979 536
Compensation costs 3,698 3,675
3 unchanged sentences
Identifiable intangible assets ( 27,118 ) ( 1,633 )
−Removed: Net deferred tax asset
−Removed: *Prior period information has been restated for the adoption of ASU No.
−Removed: 2014-09, “ Revenue from Contracts with Customers (Topic 606) ”, which we adopted on October 1, 2018.
+Added: Net deferred tax (liability) asset $ ( 16,782 ) $ 7,069
As of September 30, 2020, we had $ 3.1 million of tax carryforwards (net of reserves) related to federal and state research and development tax credits.
−Removed: We also had $2.6 million of carryforwards (net, tax effected) consisting of a U.S.
−Removed: capital loss of $2.2 million , $0.1 million of other U.S.
−Removed: tax attributes, and non-U.S.
−Removed: net operating losses of $0.3 million .
+Added: We also had $ 2.9 million of carryforwards consisting of a U.S.
+Added: capital loss of $ 2.6 million, non-U.S.
+Added: net operating losses of $ 0.2 million and foreign tax credits of $ 0.1 million.
The majority of our federal research and development tax credits have a 20-year carryforward period.
3 unchanged sentences
tax credit carryforwards will expire in 2034.
−Removed: capital loss carryforward will expire in 2020.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: INCOME TAXES (CONTINUED)
+Added: capital loss carryforward will expire in fiscal tax year 2021.
Our valuation allowance for certain U.S.
and foreign locations was $ 4.4 million at September 30, 2020 and $ 3.8 million at September 30, 2019.
−Removed: The increase in valuation allowance is primarily the result of state research and development credits generated.
+Added: The increase in valuation allowance is primarily the result of prior period adjustments to the valuation allowance and state research and development credits generated.
The deferred tax assets realized could vary if there are differences in the timing or amount of future reversals of existing deferred tax liabilities or changes in the amounts of future taxable income.
1 unchanged sentence
This would be reflected as income tax expense at the time that any such change in future taxable income is determined.
−Removed: The reconciliation of the statutory federal income tax amount to our income tax provision is (in thousands):
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: INCOME TAXES (CONTINUED)
+Added: The reconciliation of the statutory federal income tax amount to our income tax (benefit) expense is (in thousands):
Fiscal year ended September 30,
−Removed: (as adjusted)*
−Removed: (as adjusted)*
+Added: 2020 2019 2018
Statutory income tax amount $ 1,567 $ 2,341 $ 809
14 unchanged sentences
Adjustment of tax contingency reserves 151 146 193
−Removed: Income tax provision
−Removed: *Prior period information has been restated for the adoption of ASU No.
−Removed: 2014-09, “ Revenue from Contracts with Customers (Topic 606) ”, which we adopted on October 1, 2018.
+Added: deduction for foreign export sales ( 355 ) ( 146 ) —
+Added: Global intangible low-taxed income 31 162 —
+Added: Other, net ( 31 ) ( 6 ) 83
+Added: Income tax (benefit) expense $ ( 948 ) $ 1,187 $ 1,619
The Tax Cuts & Jobs Act of 2017 was enacted in the U.S.
2 unchanged sentences
At September 30, 2018 we had not fully completed our accounting for the enactment effects of this act.
−Removed: We, however, had recorded a provisional estimate of the effects on our existing deferred tax balances and the one-time transition tax.
−Removed: The provision tax expense recorded in fiscal 2018 was $3.0 million .
+Added: We, however, had recorded a provisional estimate of the tax expense related to the effects on our existing deferred tax balances and the one-time transition tax which totaled $ 3.0 million in fiscal 2018.
In the first quarter of fiscal 2019 we completed our accounting for the enactment date income tax effects of this act, and there were no significant adjustments to the provisional amounts recorded in fiscal 2018.
1 unchanged sentence
The estimated tax impacts of these provisions are included in our effective tax rate for the current period.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: INCOME TAXES (CONTINUED)
A reconciliation of the beginning and ending amount of unrecognized tax benefits is (in thousands):
Fiscal year ended September 30,
+Added: 2020 2019 2018
Unrecognized tax benefits at beginning of fiscal year $ 1,713 $ 1,561 $ 1,335
4 unchanged sentences
Prior year income tax positions — ( 34 ) —
+Added: Settlements ( 7 ) — —
Expiration of statute of limitations ( 287 ) ( 137 ) ( 128 )
Unrecognized tax benefits at end of fiscal year $ 2,600 $ 1,713 $ 1,561
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: INCOME TAXES (CONTINUED)
The total amount of unrecognized tax benefits ("UTB") at September 30, 2020 that, if recognized, would affect our effective tax rate was $ 2.4 million.
16 unchanged sentences
We are currently under U.S.
−Removed: federal examination for fiscal year 2017, and there is very limited audit activity of our income tax returns in U.S.
+Added: federal examination for fiscal years 2017 and 2018, and there is very limited audit activity of our income tax returns in U.S.
state jurisdictions or international jurisdictions.
At September 30, 2020, the majority of undistributed foreign earnings are taxed under the one time transition tax and the global intangible low-taxed income ("GILTI") provision of the Tax Cuts and Jobs Act of 2017.
−Removed: Additionally, the previously un-taxed accumulated undistributed foreign earnings from fiscal 2018 are still permanently reinvested and, as such, we have not accrued additional U.S.
+Added: Additionally, the previously un-taxed accumulated undistributed foreign earnings from prior fiscal years are still permanently reinvested and, as such, we have not accrued additional U.S.
It is our position that the earnings of our foreign subsidiaries are to be reinvested indefinitely to fund current operations and provide for future international expansion opportunities and only repatriate earnings to the extent that U.S.
taxes have already been recorded.
−Removed: As of September 30, 2019 , we are permanently reinvested with respect to previously taxed accumulated earnings in all jurisdictions.
+Added: As of September 30, 2020, we are permanently reinvested with respect to previously non-taxed accumulated earnings in all jurisdictions.
Although we have no current need to repatriate historical foreign earnings that have not been taxed in the U.S., if we change our assertion from indefinitely reinvesting undistributed foreign earnings, we would have to accrue applicable taxes.
1 unchanged sentence
Under current tax law, we estimate the unrecognized tax liability to be immaterial.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
STOCK-BASED COMPENSATION
−Removed: Stock-based awards were granted under the 2019 Omnibus Incentive Plan (the “2019 Plan”) beginning February 4, 2019 and, prior to that, were granted under the 2018 Omnibus Incentive Plan (the “2018 Plan”).
−Removed: Upon stockholder approval of the 2019 Plan, we ceased granting awards under any prior plan.
−Removed: Shares subject to awards under prior plans that are forfeited, canceled, returned to us for failure to satisfy vesting requirements, settled in cash or otherwise terminated without payment also will be available for grant under the 2019 Plan.
−Removed: The authority to grant options under the 2019 Plan and to set other terms and conditions rests with the Compensation Committee of our Board of Directors.
−Removed: We also have awards outstanding under our 2017 Omnibus Incentive Plan, 2016 Omnibus Plan, 2014 Omnibus Plan, 2013 Omnibus Incentive Plan and the 2000 Omnibus Stock Plan, as amended and restated as of December 4, 2009.
+Added: Stock-based awards were granted under the 2020 Omnibus Incentive Plan (the "2020 Plan") beginning January 29, 2020.
+Added: Prior to that date such awards made in fiscal 2020 were granted under the 2019 Omnibus Incentive Plan (the "2019 Plan").
+Added: Upon stockholder approval of the 2020 Plan, we ceased granting awards under the 2019 Plan.
+Added: Shares subject to awards under the 2019 Plan or any prior plans that are forfeited, canceled, returned to us for failure to satisfy vesting requirements, settled in cash or otherwise terminated without payment also will be available for grant under the 2020 Plan.
+Added: The authority to grant options under the 2020 Plan and to set other terms and conditions rests with the Compensation Committee of the Board of Directors.
The 2020 Plan authorizes the issuance of up to 1,500,000 common shares in connection with awards of stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based full value awards or other stock-based awards.
2 unchanged sentences
Restricted stock unit awards ("RSUs") that have been granted to directors typically vest in one year .
−Removed: RSUs that have been granted to executives and employees typically vest in December over a four -year period.
−Removed: The 2019 Plan is scheduled to expire on February 3, 2029.
−Removed: Options under the 2019 Plan can be granted as either incentive stock options (“ISOs”) or non-statutory stock options (“NSOs”).
−Removed: The exercise price of options and the grant date price of restricted stock units shall be determined by our Compensation Committee but shall not be less than the fair market value of our common stock based on the closing price on the date of grant.
+Added: RSUs that have been granted to executives and employees typically vest in January over a four-year period.
+Added: The 2020 Plan is scheduled to expire on January 28, 2030.
+Added: Options under the 2020 Plan can be granted as either incentive stock options or non-statutory stock options.
+Added: The exercise price of options and the grant date price of RSUs is determined by our Compensation Committee but will not be less than the fair market value of our common stock based on the closing price as of the date of grant.
+Added: Upon exercise of options or settlement of vested restricted stock units, we issue new shares of stock.
As of September 30, 2020, there were approximately 1,209,150 shares available for future grants under the 2020 Plan.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: STOCK-BASED COMPENSATION (CONTINUED)
The 2019 Plan, under which grants ceased upon approval of the 2020 Plan, authorized the issuance of up to 1,500,000 common shares in connection with awards of stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based full value awards or other stock-based awards.
2 unchanged sentences
RSUs that were granted to directors typically vested in one year .
−Removed: RSUs that were granted to executives and employees typically vested in January over a four -year period.
−Removed: Awards may no longer be granted under the 2018 Plan as grants ceased upon approval of the 2019 Plan effective February 4, 2019 at the Annual Meeting of Stockholders.
−Removed: The exercise price of options and the grant date price of restricted stock units was determined by our Compensation Committee but could not be less than the fair market value of our common stock based on the closing price on the date of grant.
+Added: RSUs that were granted to executives and employees typically vested in December over a four-year period.
+Added: Awards may no longer be granted under the 2019 Plan as grants ceased upon approval of the 2020 Plan effective January 29, 2020 at the Annual Meeting of Stockholders.
+Added: The exercise price of options and the grant date price of restricted stock units was determined by our Compensation Committee but could be less than the fair market value of our common stock based on the closing price on the date of grant.
Our equity plans and corresponding forms of award agreements generally have provisions allowing employees to elect to satisfy tax withholding obligations through the delivery of shares, having us retain a portion of shares issuable under the award or paying cash to us for the withholding.
During fiscal 2020, 2019 and 2018 our employees forfeited 103,492 , 93,128 and 74,204 shares, respectively in order to satisfy $ 1.8 million, $ 1.1 million and $ 0.7 million, respectively, of withholding tax obligations related to stock-based compensation, pursuant to terms of awards under our board and shareholder-approved compensation plans.
−Removed: We sponsor an Employee Stock Purchase Plan, as amended and restated as of October 29, 2013, December 4, 2009 and November 27, 2006 (the "Purchase Plan"), covering all domestic employees with at least 90 days of continuous service and who are customarily employed at least 20 hours per week.
+Added: We sponsor an Employee Stock Purchase Plan, as amended and restated as of December 10, 2019, October 29, 2013, December 4, 2009 and November 27, 2006 (the "Purchase Plan"), covering all domestic employees with at least 90 days of continuous service and who are customarily employed at least 20 hours per week.
The Purchase Plan allows eligible participants the right to purchase common stock on a quarterly basis at the lower of 85 % of the market price at the beginning or end of each three-month offering period.
4 unchanged sentences
As of September 30, 2020, 711,714 shares of common stock were available for future issuances under the Purchase Plan.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: STOCK-BASED COMPENSATION (CONTINUED)
Stock-based compensation expense is included in the consolidated results of operations as (in thousands):
Fiscal year ended September 30,
+Added: 2020 2019 2018
Cost of sales $ 291 $ 174 $ 195
5 unchanged sentences
Stock-based compensation after income taxes $ 5,714 $ 4,481 $ 3,837
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: STOCK-BASED COMPENSATION (CONTINUED)
Stock Options
Below is a summary of our stock options as of September 30, 2020 and changes during the twelve months then ended (in thousands, except per common share amounts):
−Removed: Options Outstanding
−Removed: Weighted Average Exercised Price
−Removed: Weighted Average Contractual Term (in years)
−Removed: Aggregate Intrinsic Value (1)
+Added: Options Outstanding Weighted Average Exercised Price Weighted Average Contractual Term (in years) Aggregate Intrinsic Value (1)
Balance at September 30, 2019 3,348 $ 10.85
+Added: Granted 796 16.56
+Added: Exercised ( 583 ) 10.12
Forfeited / Canceled ( 168 ) 13.16
6 unchanged sentences
Fiscal year ended September 30,
+Added: 2020 2019 2018
Weighted average per option grant date fair value $ 6.17 $ 4.48 $ 3.98
1 unchanged sentence
Risk free interest rate 0.37% - 1.73% 1.60% - 2.93% 2.12% - 2.89%
−Removed: 1.60% - 2.93%
−Removed: 2.12% - 2.89%
−Removed: 1.46% - 1.96%
−Removed: Expected term
+Added: Expected term 6.00 years 6.00 years 6.00 years
Expected volatility 36% - 44% 33% - 35% 33% - 34%
4 unchanged sentences
We use historical data to estimate option exercise and employee termination information within the valuation model.
−Removed: The expected term of options granted is derived from the vesting period and historical information and represents the period of
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: STOCK-BASED COMPENSATION (CONTINUED)
−Removed: time that options granted are expected to be outstanding.
+Added: The expected term of options granted is derived from the vesting period and historical information and represents the period of time that options granted are expected to be outstanding.
The risk-free rate used is the zero-coupon U.S.
2 unchanged sentences
The related weighted average period over which this cost is expected to be recognized was approximately 2.8 years.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: STOCK-BASED COMPENSATION (CONTINUED)
As of September 30, 2020, the weighted average exercise price and remaining life of the stock options were (in thousands, except remaining life and exercise price):
−Removed: Options Outstanding
−Removed: Options Exercisable
−Removed: Range of Exercise Prices
−Removed: Options Outstanding
−Removed: Weighted Average Remaining Contractual Life (In Years)
−Removed: Weighted Average Exercise Price
−Removed: Number of Shares Vested
−Removed: Weighted Average Exercise Price
+Added: Options Outstanding Options Exercisable
+Added: Range of Exercise Prices Options Outstanding Weighted Average Remaining Contractual Life (In Years) Weighted Average Exercise Price Number of Shares Vested Weighted Average Exercise Price
$7.40 - $9.03 485 2.33 $ 8.22 485 $ 8.22
9 unchanged sentences
Below is a summary of our non-vested restricted stock units as of September 30, 2020 and changes during the twelve months then ended (in thousands, except per common share amounts):
−Removed: Number of Awards
−Removed: Weighted Average Grant Date Fair Value
+Added: Number of Awards Weighted Average Grant Date Fair Value
Nonvested at September 30, 2019 888 $ 11.65
+Added: Granted 516 $ 14.86
+Added: Vested ( 322 ) $ 11.78
+Added: Canceled ( 110 ) $ 12.53
Nonvested at September 30, 2020 972 $ 13.20
6 unchanged sentences
There were no shares repurchased under this program.
−Removed: On May 2, 2017, our Board of Directors authorized a program to repurchase up to $20.0 million of our common stock primarily to return capital to shareholders.
−Removed: This repurchase authorization expired on May 1, 2018.
−Removed: Shares repurchased under the program
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: COMMON STOCK REPURCHASE (CONTINUED)
−Removed: could be made through open market and privately negotiated transactions from time to time and in amounts that management deemed appropriate.
−Removed: The amount and timing of share repurchases depended upon market conditions and other corporate considerations.
−Removed: During the third quarter of fiscal 2017, we repurchased 28,691 shares for $0.3 million .
−Removed: No further repurchases of common stock were made under this program.
EMPLOYEE BENEFIT PLANS
We currently have a savings and profit sharing plan pursuant to Section 401(k) of the Internal Revenue Code (the Code), whereby eligible employees may contribute up to 25 % of their pre-tax earnings subject to certain limits under law.
−Removed: We provide a match of 100% on the first 3% of each employee’s bi-weekly contribution and a 50% match on the next 2% of each employee’s bi-weekly contribution.
+Added: Prior to May 3, 2020, we provided a match of 100 % on the first 3 % of each employee’s bi-weekly contribution and a 50 % match on the next 2 % of each employee’s bi-weekly contribution.
In addition, we may make contributions to the plan at the discretion of the Board of Directors.
+Added: Effective May 3, 2020 we indefinitely suspended the employer matching contributions in
+Added: EMPLOYEE BENEFIT PLANS (CONTINUED)
+Added: the United States and Canada.
We provided matching contributions of $ 1.7 million for fiscal 2020, $ 1.8 million for fiscal 2019 and $ 1.6 million for fiscal 2018.
−Removed: In October 2018, we signed a thirteen -year lease agreement for our new headquarters located in Hopkins, Minnesota.
−Removed: We have minimum total lease obligations of $14.8 million under this lease with Colfin Midwest NNN Investor, LLC for 59,497 square feet of office space.
−Removed: In April 2019, we received $3.3 million for a tenant improvement allowance associated with our new headquarters.
−Removed: We have entered into various other operating lease agreements for office facilities and equipment, the last of which expires in fiscal 2032 .
−Removed: The office facility leases generally require us to pay a pro-rata share of the lessor’s operating expenses.
−Removed: Certain operating leases contain escalation clauses and are being amortized on a straight-line basis over the term of the lease.
−Removed: The following schedule reflects future minimum rental commitments at September 30, 2019 under noncancelable operating leases (in thousands):
−Removed: Total minimum payments required
−Removed: The following schedule shows the composition of total rental expense for all operating leases for the years ended September 30 (in thousands):
−Removed: Fiscal year ended September 30,
−Removed: Total rental expense
−Removed: CONTINGENCIES
+Added: COMMITMENTS AND CONTINGENCIES
+Added: We lease certain of our buildings and equipment under noncancelable lease agreements.
+Added: Please refer to Note 10 to our consolidated financial statements for additional information.
In November 2018, DimOnOff Inc., a company headquartered in Quebec City, Quebec, Canada (“DimOnOff”), which sells control systems in the building automation and street lighting markets sued us and a former distributor from whom DimOnOff purchased certain of our products.
4 unchanged sentences
In addition to the matter discussed above, in the normal course of business, we are subject to various claims and litigation, which may include, but are not limited to, patent infringement and intellectual property claims.
−Removed: While we are unable to predict
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: CONTINGENCIES (CONTINUED)
−Removed: the outcome of any potential claims or litigation due to the inherent unpredictability of these matters, we believe that it is possible that we could, in the future, incur judgments or enter into settlements of claims that could have a material adverse effect on our operations in any particular period.
+Added: While we are unable to predict the outcome of any potential claims or litigation due to the inherent unpredictability of these matters, we believe that it is possible that we could, in the future, incur judgments or enter into settlements of claims that could have a material adverse effect on our operations in any particular period.
QUARTERLY FINANCIAL DATA (UNAUDITED)
1 unchanged sentence
Quarter ended
+Added: 31 March 31 June 30 Sept.
+Added: Revenue $ 62,317 $ 73,447 $ 70,338 $ 73,169
+Added: Gross profit $ 30,464 $ 38,641 $ 37,349 $ 37,518
Net income (1) $ 208 $ 2,004 $ 1,766 $ 4,433
1 unchanged sentence
Net income per common share - diluted $ 0.01 $ 0.07 $ 0.06 $ 0.15
−Removed: Fiscal 2018 (as adjusted) (2)
−Removed: Net (loss) income (1)
−Removed: Net (loss) income per common share - basic
−Removed: Net (loss) income per common share - diluted
−Removed: During fiscal 2019, we recorded a discrete tax benefit of $0.1 million in the first quarter of fiscal 2019 resulting from reversal of income tax reserves due to the expiration of the statutes of limitation as well as excess tax benefits recognized on stock compensation.
−Removed: In the second quarter of fiscal 2019 we recorded a discrete tax benefit of $0.2 million related to the recording of federal and state net operating losses as well as the reversal of income tax reserves due to the expiration of the statutes of limitation.
−Removed: In the third quarter of fiscal 2019, we recorded a discrete tax benefit of $0.3 million from reversal of income tax reserves due to the expiration of the statutes of limitation as well as adjustments from the filing of the federal and foreign income tax returns.
−Removed: During fiscal 2018, we recorded discrete tax expense of $2.8 million in the first quarter of fiscal 2018, $0.2 million in the second quarter of fiscal 2018 and $0.1 million in the third quarter of fiscal 2018 resulting from new U.S.
−Removed: tax legislation that was enacted during the first quarter of fiscal 2018 and the adoption of ASU 2016-09 relating to the accounting for the tax effects of stock compensation.
−Removed: In the fourth quarter of fiscal 2018, we recorded a net tax benefit of $1.5 million for the release of a valuation allowance against U.S.
−Removed: federal capital loss carryforward due to expected capital gains tax in fiscal 2019 resulting from the sale of our corporate headquarters building in October 2018 (see Note 5 to the consolidated financial statements).
−Removed: Prior period information has been restated for the adoption of ASU No.
−Removed: 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which we adopted on October 1, 2018.
−Removed: SUBSEQUENT EVENT
−Removed: On November 7, 2019, we entered in to an agreement and plan of merger to acquire Opengear, Inc., a privately-held provider of secure IT infrastructure products and software for approximately $140 million in cash with a potential for contingent consideration of up to an additional $15 million based on revenue performance through 2020.
−Removed: The acquisition will be funded through a combination of cash on hand and debt financing under a $150 million credit facility committed by BMO Harris Bank N.A.
−Removed: We expect to complete preliminary purchase accounting in the first quarter of fiscal 2020.
−Removed: The acquired company will be included within our IoT Products & Services segment.
−Removed: The acquisition is subject to routine closing conditions, including federal anti-trust review.
+Added: Revenue $ 62,313 $ 65,764 $ 61,166 $ 64,960
+Added: Gross profit $ 29,783 $ 30,329 $ 28,328 $ 30,595
+Added: Net income $ 4,682 $ 1,342 $ 1,648 $ 2,286
+Added: Net income per common share - basic $ 0.17 $ 0.05 $ 0.06 $ 0.08
+Added: Net income per common share - diluted $ 0.17 $ 0.05 $ 0.06 $ 0.08
+Added: (1) During fiscal 2020, we recorded a discrete tax benefit of $ 1.0 million in the first quarter of fiscal 2020 resulting from excess tax benefits recognized on stock compensation and an adjustment of our state deferred tax rate due to the Opengear acquisition.
+Added: SUBSEQUENT EVENTS
+Added: Restructuring
+Added: On October 7, 2020, our Board of Directors approved a reorganization of our IoT Products & Services business segment ("the plan").
+Added: The plan aligns the business segment's organization around product lines.
+Added: Under the plan, we expect to eliminate
+Added: SUBSEQUENT EVENTS (CONTINUED)
+Added: approximately 20 employment positions during the first quarter ending December 31, 2020.
+Added: In connection with the plan, we expect to incur total restructuring charges in the range of $ 0.8 million to $ 0.9 million relating to cash severance expenses during the first fiscal quarter ended December 31, 2020.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.