MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
−Removed: out-right, that portion of the revenue is recognized at the stand-alone selling price at the time the equipment is shipped and all other revenue is recognized over the subscription term of the contract.
+Added: other revenue is recognized over the subscription term of the contract.
We have made an accounting policy election to exclude from the measurement of our revenues any sales or similar taxes we collect from customers.
8 unchanged sentences
If the carrying amount of a reporting unit is higher than its estimated fair value, an impairment loss must be recognized for the excess.
−Removed: We have two reportable operating segments, our IoT Products & Services segment and our IoT Solutions segment (see Note 4 to the consolidated financial statements).
−Removed: Effective with the reorganization announcement on October 7, 2020 (see Note 10 ), our IoT Products & Services business is now structured to include four reporting units under the IoT Products & Services segment, each with a reporting manager:
+Added: We have two reportable segments, our IoT Products & Services segment and our IoT Solutions segment (see Note 4 to the consolidated financial statements).
+Added: Effective with the reorganization announcement on October 7, 2020 (see Note 10 ), our IoT Products & Services business is structured to include four reporting units under the IoT Products & Services segment, each with a reporting manager:
Cellular Routers, Console Servers, OEM Solutions and Infrastructure Management.
Following our acquisition of Ventus in the first fiscal quarter of 2022, IoT Solutions is comprised of two reporting units;
−Removed: Ventus and SmartSense.
−Removed: We have six reporting units that have been tested individually for impairment.
+Added: Ventus and SmartSense by Digi.
+Added: Each of our six reporting units have been tested individually for impairment.
The fair value of each reporting unit is determined using a weighted combination of an income and market approach.
A discounted cash flow (“DCF”) method is utilized for the income approach.
−Removed: In developing the discounted cash flow analysis, our assumptions about future revenues, expenses, capital expenditures, and changes in working capital are based on management’s projections, and assume a terminal growth rate thereafter.
+Added: In developing the DCF analysis, our assumptions about future revenues, expenses, capital expenditures, and changes in working capital are based on management’s projections, and assume a terminal growth rate thereafter.
A separate discount rate is determined for each reporting unit and these cash flows are then discounted to determine the fair value of the reporting unit.
7 unchanged sentences
Changes in circumstances or a potential event could negatively affect the estimated fair values.
−Removed: We will continue to monitor potential COVID-19 industry and demand impacts as this could potentially affect our cash flows and market capitalization.
+Added: We will continue to monitor potential impacts to our assumptions, as any changes could potentially affect our cash flows and market capitalization.
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: Digi conducted an analysis as of September 30, 2023 and concluded changes in market conditions from the time of the fiscal 2023 test, conducted as of June 30,2023, were not indicative of a reduction in fair value of any of our reporting units.
Results of our Fiscal 2023 Annual Impairment Test
−Removed: As of June 30, 2022, we had a total of $32.7 million of goodwill for the Enterprise Routers reporting unit, $57.1 million of goodwill for the Console Servers reporting unit, $63.7 million of goodwill for the OEM Solutions reporting unit, $20.4 million of goodwill for the Infrastructure Management reporting unit, $49.5 million of goodwill for the SmartSense reporting unit and $118.3 million of goodwill for the Ventus reporting unit.
−Removed: At June 30, 2022, the fair value of goodwill exceeded the carrying value for all six reporting units.
−Removed: SmartSense and Ventus fair values exceeded carrying values by less than 10%.
−Removed: Implied fair value for each reporting unit was calculated on a standalone basis using a weighted combination of the income approach and market approach.
−Removed: The implied fair values of each reporting unit were added together along with our unallocated assets to get an indicated value of total equity to which a range of indicated value of total equity was derived.
−Removed: This range was compared to the
−Removed: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
−Removed: total market capitalization of $852.0 million as of June 30, 2022.
−Removed: This implied a range of control (deficit)/ premiums of (5.6)% to 7.9%.
−Removed: This range of control premiums fell below the control premiums observed in the last five years in the communications equipment industry.
−Removed: As a result, the market capitalization reconciliation analysis proved support for the reasonableness of the fair values estimated for each individual reporting unit.
−Removed: CONTINGENT CONSIDERATION
−Removed: We measure our contingent consideration liabilities recognized in connection with business combinations at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy as defined in ASC 820 "Fair Value Measurement".
−Removed: We used a probability-weighted discounted cash flow approach as the valuation technique to determine the fair value of the contingent consideration on the acquisition date.
−Removed: At each subsequent reporting period, the fair value is re-measured with the change in fair value recognized in general and administrative expense in our consolidated statements of operations.
−Removed: Any amounts paid to the sellers in excess of the amount recorded on the acquisition date will be classified as cash flows used in operating activities.
−Removed: Payments to the sellers not exceeding the acquisition-date fair value of the contingent consideration will be classified as cash flows used in financing activities.
−Removed: We operate in multiple tax jurisdictions both in and outside of the U.S.
−Removed: Accordingly, we must determine the appropriate allocation of income to each of these jurisdictions.
−Removed: This determination requires us to make several estimates and assumptions.
−Removed: Tax audits associated with the allocation of this income, and other complex issues, may require an extended period of time to resolve.
−Removed: They also could result in adjustments to our income tax balances that are material to our consolidated financial position and results of operations and could result in potential cash outflows.
−Removed: Liabilities for uncertain tax positions are also established for potential and ongoing audits of federal, state and international issues.
−Removed: We routinely monitor the potential impact of such situations and believe that liabilities are properly stated.
−Removed: Valuations related to amounts owed and tax rates could be impacted by changes to tax codes and our interpretation thereof, changes in statutory rates, our future taxable income levels and the results of tax audits.
+Added: As of June 30, 2023, we had a total of $32.7 million of goodwill for the Cellular Routers reporting unit, $57.1 million of goodwill for the Console Servers reporting unit, $64.6 million of goodwill for the OEM Solutions reporting unit, $20.4 million of goodwill for the Infrastructure Management reporting unit, $48.9 million of goodwill for the SmartSense by Digi reporting unit and $118.6 million of goodwill for the Ventus reporting unit.
+Added: At June 30, 2023, the fair value of goodwill exceeded the carrying value for all six reporting units and no impairment was recorded.
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.