FLTX Fleetmatics Grp. Plc Ordinary Shares

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

(Unaudited)

1. Nature of the Business

Fleetmatics Group PLC (the “Company”) is a public limited company incorporated in the Republic of Ireland. The Company is a leading global provider of mobile workforce solutions for service-based businesses of all sizes delivered as software-as-a-service (“SaaS”). Its mobile software platform enables businesses to meet the challenges associated with managing their local fleets of commercial vehicles and improve productivity by extracting actionable business intelligence from real-time and historical vehicle and driver behavioral data. The Company offers intuitive, cost-effective Web-based and mobile solutions that provide fleet operators with visibility into vehicle location, fuel usage, speed and mileage and other insights into their mobile workforce, enabling them to reduce operating and capital costs, as well as increase revenue. An integrated, full-featured mobile workforce management product provides additional efficiencies related to job management by empowering the field worker and expediting the job completion process from quote through payment.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States of America and include the accounts of the Company and its wholly owned subsidiaries after elimination of all intercompany accounts and transactions. All dollar amounts in the financial statements and in the notes to the consolidated financial statements, except share and per share amounts, are stated in thousands of U.S. Dollars unless otherwise indicated.

The accompanying consolidated balance sheet as of September 30, 2016, the consolidated statements of operations and the consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2016 and 2015, and the consolidated statements of cash flows for the nine months ended September 30, 2016 and 2015 are unaudited. The interim unaudited financial statements have been prepared on the same basis as the annual audited financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2016, the results of its operations and its comprehensive income (loss) for the three and nine months ended September 30, 2016 and 2015, and its cash flows for the nine months ended September 30, 2016 and 2015. The consolidated financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2016 and 2015 are also unaudited. The results for the three and nine months ended September 30, 2016 are not necessarily indicative of results to be expected for the year ending December 31, 2016 or for any other interim periods or future year.

Certain information and footnote disclosures normally included in the Company’s annual audited consolidated financial statements and accompanying notes have been condensed or omitted in these interim financial statements. Accordingly, these unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2015 included in its Annual Report on Form 10-K (“Annual Report”) filed with the Securities and Exchange Commission on February 26, 2016.

Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, is used to measure fair value:

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The carrying values of accounts receivable, accounts payable and accrued expenses and other liabilities approximate fair value due to the short-term nature of these assets and liabilities. As of September 30, 2016 and December 31, 2015, the Company had no other assets or liabilities that would be classified under this fair value hierarchy.

Deferred Commissions

The Company capitalizes commission costs that are incremental and directly related to the acquisition of new customer contracts with a term of greater than one year. For the majority of its customer contracts, the Company pays commissions in full when it receives the initial customer contract for a new subscription or a renewal subscription. For all other customer contracts, the Company pays commissions in full when it receives the initial customer payment for a new subscription or a renewal subscription. Commission costs are capitalized upon payment and are amortized as expense ratably over the term of the related non-cancelable customer contract, in proportion to the recognition of the subscription revenue. If a subscription agreement is terminated, the unamortized portion of any deferred commission cost is recognized as expense immediately.

Commission costs capitalized during the three months ended September 30, 2016 and 2015 totaled $3,156 and $4,103, respectively, and during the nine months ended September 30, 2016 and 2015 totaled $10,104 and $9,741, respectively. Amortization of deferred commissions totaled $3,042 and $2,465 for the three months ended September 30, 2016 and 2015, respectively, and totaled $8,945 and $7,412 for the nine months ended September 30, 2016 and 2015, respectively, and is included in sales and marketing expense in the consolidated statements of operations. Deferred commission costs, net of amortization, are included in other current and long-term assets in the consolidated balance sheets and totaled $18,620 and $17,518 as of September 30, 2016 and December 31, 2015, respectively. Foreign exchange differences also contribute to changes in the net amount of these deferred commission costs.

Capitalized In-Vehicle Device Costs

For in-vehicle devices of which the Company retains ownership after they are installed in a customer’s fleet, the cost of the in-vehicle devices (including installation and shipping costs) is capitalized as property and equipment. The Company depreciates these costs over the minimum estimated useful life of the devices or over the estimated average customer relationship period, which are both currently six years, beginning upon completion of installation. Related depreciation expense is recorded in cost of subscription revenue. If a customer subscription agreement is canceled or expires prior to the end of the expected useful life of the in-vehicle device, the carrying value of the asset is depreciated in full with expense immediately recorded as cost of subscription revenue. Before installation in a customer’s fleet, in-vehicle devices of which the Company retains ownership are recorded within property and equipment (referred to as In-vehicle devices—uninstalled), but are not depreciated.

For the limited number of customer arrangements in which title to the in-vehicle devices transfers to the customer upon delivery or installation of the in-vehicle device (for which the Company receives an up-front fee from the customer), the Company defers the costs of the installed in-vehicle devices (including installation and shipping costs) as they are directly related to the revenue that the Company derives from the sale of the devices and that it recognizes ratably over the estimated average customer relationship period of six years. The Company capitalizes these in-vehicle device costs and amortizes the deferred costs as expense ratably over the estimated average customer relationship period, in proportion to the recognition of the up-front fee revenue.

Costs of in-vehicle devices owned by customers that were capitalized during the three and nine months ended September 30, 2015 totaled $379 and $392, respectively. Amortization of these capitalized costs totaled $122 and $639 for the three and nine months ended September 30, 2015, respectively, and is included in cost of subscription revenue in the consolidated statements of operations. Generally, the Company does not enter into customer arrangements whereby title to the in-vehicle devices transfers to the customer upon delivery or installation of the in-vehicle device.

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Recently Issued and Adopted Accounting Pronouncements

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows (topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 is intended to reduce diversity in practice in how certain cash receipts and payments are classified in the statement of cash flows, including debt prepayment or extinguishment costs, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, and distributions from certain equity method investees. ASU 2016-15 is effective for interim and annual periods beginning after December 15, 2017 and early adoption is permitted. ASU 2016-15 requires application using a retrospective transition method. The Company is currently assessing the potential impact of ASU 2016-15 on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which amends Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation . ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years and early adoption is permitted. The Company is currently assessing the potential impact of ASU 2016-09 on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Additionally, ASU 2016-02 modifies current guidance for lessors’ accounting. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the potential impact of ASU 2016-02 on its consolidated financial statements.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustment (“ASU 2015-16”). ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Prior to the issuance of the standard, entities were required to retrospectively apply adjustments made to provisional amounts recognized in a business combination. The standard was effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. The Company adopted this standard in the first quarter of 2016 and it did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In April 2015, the FASB issued ASU 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Prior to the issuance of the standard, debt issuance costs were required to be presented in the balance sheet as an asset. The standard was effective for the first interim period within annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company adopted this standard in the first quarter of 2016 and it did not impact the Company’s consolidated financial position, results of operations or cash flows.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The standard requires either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of the new accounting guidance related to revenue recognition by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also proposed permitting early adoption of the standard, but not before the original effective date of December 15, 2016. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , which clarifies certain aspects of identifying performance obligations and licensing implementation guidance. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes collected from customers. These standards have the same effective date and transition date of December 15, 2017 for annual reporting periods beginning after that date. The Company is in the process of evaluating the impact, if any, that the adoption of the new revenue recognition standard will have on its consolidated financial statements and footnote disclosures.

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3. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following at September 30, 2016 and December 31, 2015:

4. Property and Equipment

Property and equipment consisted of the following at September 30, 2016 and December 31, 2015:

Depreciation and amortization expense related to property and equipment totaled $9,288 and $7,387 for the three months ended September 30, 2016 and 2015, respectively, and totaled $27,746 and $20,520 for the nine months ended September 30, 2016 and 2015, respectively. Of those amounts, $8,362 and $6,470 for the three months ended September 30, 2016 and 2015, respectively, and $24,907 and $18,350 for the nine months ended September 30, 2016 and 2015, respectively, was recorded in cost of subscription revenue primarily related to depreciation of installed in-vehicle devices and amortization of internal-use software and the remaining costs were included in various operating expenses. The carrying value of installed in-vehicle devices (including shipping and installation costs), net of accumulated depreciation, was $78,690 and $76,835 at September 30, 2016 and December 31, 2015, respectively.

During the nine months ended September 30, 2016 and 2015, the Company capitalized costs of $5,134 and $3,222, respectively, associated with the development of its internal-use software related to its SaaS software offerings accessed by customers as well as customization and development of its internal business systems. Amortization expense of the internal-use software totaled $1,092 and $662 during the three months ended September 30, 2016 and 2015, respectively, and $2,995 and $1,613 during the nine months ended September 30, 2016 and 2015, respectively. The carrying value of capitalized internal-use software was $9,423 and $7,125 as of September 30, 2016 and December 31, 2015, respectively. Foreign exchange differences also contribute to changes in the carrying value of internal-use software.

As of September 30, 2016 and December 31, 2015, the gross amount of assets under capital leases totaled $7,784 and $6,749, respectively, and related accumulated amortization totaled $4,181 and $2,564, respectively.

During the three months ended September 30, 2016 and 2015, the Company expensed $881 and $1,005, respectively, and during the nine months ended September 30, 2016 and 2015 expensed $2,622 and $2,224, respectively, primarily in conjunction with installed in-vehicle devices requiring replacement. The expense was recorded in cost of subscription revenue and is included in loss on disposal of property and equipment and other assets in the consolidated statements of cash flows.

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5. Business Combination

On September 2, 2016, the Company acquired all of the stock and equity interests of Inosat – Consultoria Informática, S.A. (“Inosat”), a Portugal-based privately-held SaaS-based provider of fleet management solutions. The total consideration of $24,886 consisted of $21,633 of cash paid to acquire all of the assets of Inosat and to assume a nominal amount of liabilities and $3,253 of contingent consideration. The excess of the purchase price over the fair values of assets acquired and liabilities assumed was recorded as goodwill of $14,831. This acquisition reflects the Company’s global growth strategy to further expand into mainland Europe and to acquire additional customers in new territories.

The following table summarizes the purchase price for Inosat and the estimated fair values of the separately identifiable assets acquired and liabilities assumed as of September 2, 2016:

The estimated fair value of the intangible assets acquired as of the acquisition date was $9,705 with a useful life of three to eight years. The acquired intangible assets consisted of customer relationships, developed technology and trademarks.

The results of Inosat have been included in the consolidated financial statements from the acquisition date of September 2, 2016. The results of Inosat were not included in pro forma combined historical results of operation of the Company as they are not material.

6. Goodwill and Intangible Assets

As of September 30, 2016 and December 31, 2015, the carrying amount of goodwill was $69,700 and $54,178, respectively, and resulted from historical acquisitions. In the first quarter of 2016, the Company recorded $72 as a purchase price adjustment resulting from the final minimum working capital requirement pursuant to the Ornicar purchase and sale agreement. In the second quarter of 2016, the Company recorded $619 as a purchase price adjustment resulting from the final minimum working capital requirement pursuant to the Visirun purchase and sale agreement. In the third quarter of 2016, the Company recorded $14,831 related to the acquisition of Inosat. No impairment of goodwill was recorded during the nine months ended September 30, 2016 or the year ended December 31, 2015.

Intangible assets consisted of the following as of September 30, 2016 and December 31, 2015, with gross and net amounts of foreign currency-denominated intangible assets reflected at September 30, 2016 and December 31, 2015 exchange rates, respectively:

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Amortization expense related to intangible assets was $1,074 and $615 for the three months ended September 30, 2016 and 2015, respectively. Of those amounts, amortization expense of $242 and $309 for the three months ended September 30, 2016 and 2015, respectively, was included in the cost of subscription revenue in the consolidated statements of operations, and amortization expense of $832 and $306 for the three months ended September 30, 2016 and 2015, respectively, was included in sales and marketing expense in the consolidated statements of operations.

Amortization expense related to intangible assets was $3,110 and $1,814 for the nine months ended September 30, 2016 and 2015, respectively. Of those amounts, amortization expense of $1,016 and $917 for the nine months ended September 30, 2016 and 2015, respectively, was included in the cost of subscription revenue in the consolidated statements of operations, and amortization expense of $2,094 and $897 for the nine months ended September 30, 2016 and 2015, respectively, was included in sales and marketing expense in the consolidated statements of operations.

We currently expect to amortize the following remaining amounts of intangible assets held at September 30, 2016 in the fiscal periods as follows:

7. Other Assets

Other assets (non-current) consisted of the following as of September 30, 2016 and December 31, 2015:

8. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following as of September 30, 2016 and December 31, 2015:

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9. Other Liabilities

Other liabilities (non-current) consisted of the following as of September 30, 2016 and December 31, 2015:

10. Long-term Debt

Credit Facility

On January 21, 2015, the Company entered into a Credit Agreement with Citibank, N.A., as administrative agent, and the lenders party thereto, for a senior, first-priority secured financing comprised of revolving loans, letters of credit and swing line loans in a total maximum amount of $125,000 (the “Credit Facility”). The Credit Facility is collateralized by a senior first lien by certain assets and property of the Company. The Credit Facility consists of a five-year multi-currency revolving credit facility in a dollar amount of up to $125,000 which includes a sublimit of $5,000 for letters of credit and a $10,000 swing line facility. The Credit Facility also includes an accordion feature that allows the Company to increase the Credit Facility to a total of $200,000, subject to securing additional commitments from existing lenders or new lending institutions. The Company used the net proceeds of borrowings under the Credit Facility to repay the $23,750 outstanding under the Company’s previously existing revolving credit facility with Wells Fargo Capital Finance, LLC (“Amended Revolving Credit Facility”), and for working capital and other general corporate purposes. As a result of the early repayment of the Amended Revolving Credit Facility, in the first quarter of 2015, the Company recorded a loss on extinguishment of debt of $107, comprised of the write-off of unamortized debt issuance costs.

At the Company’s election, loans made under the Credit Facility bear interest at either (1) a rate per annum equal to the highest of the Administrative Agent’s prime rate, or 0.5% in excess of the Federal Funds Effective Rate or 2.0% in excess of one-month LIBOR (the “Base Rate”), plus an applicable margin, or (2) the one-, two-, three-, or six-month per annum LIBOR for deposits in U.S. Dollars, plus an applicable margin. The applicable margin for the revolving loans depends on the Company’s leverage ratio and varies from 0.5% to 1.25%, in the case of Base Rate loans, and from 1.50% to 2.25%, in the case of LIBOR loans. Swing line loans bear interest at the Base Rate. Commitment fees on the average daily unused portion of the Credit Facility (excluding swing line loans) are payable at rates per annum ranging from 0.2% to 0.3%, depending on the Company’s leverage ratio.

On the issuance date of January 21, 2015, the Credit Facility was recorded in the consolidated balance sheet net of discount of $708, related to fees assessed by the lender at the time. During the second quarter of 2015, the Company recorded additional fees related to the debt of $159. The carrying value of this debt is being accreted to the principal amount of the debt by charges to interest expense using the effective-interest method over the five-year term of the Credit Facility to the maturity date. At September 30, 2016 and December 31, 2015, the debt discount balance totaled $585 and $717, respectively. Accretion amounts recognized as interest expense for the three months ended September 30, 2016 and 2015 totaled $44 and $44, respectively, and for the nine months ended September 30, 2016 and 2015, totaled $132 and $107, respectively. On the issuance date, the Company also capitalized deferred financing costs of $501 related to third-party fees incurred in connection with the Credit Facility. These deferred costs are being amortized through charges to interest expense using the effective-interest method over the five-year term of the Credit Facility to the expiration date. At September 30, 2016, deferred financing cost recorded in other current assets and other assets (non-current) were $100 and $232, respectively, and totaled $332. Amortization amounts recognized as interest expense for the three months ended September 30, 2016 and 2015 totaled $25 and $25, respectively, and for the nine months ended September 30, 2016 and 2015 totaled $75 and $70, respectively.

As of September 30, 2016, the Company had no outstanding borrowings under the Credit Facility. The Credit Facility contains certain customary financial, affirmative and negative covenants including a maximum leverage ratio and minimum interest coverage ratio and negative covenants that limit or restrict, among other things, dividends, secured indebtedness, mergers and fundamental changes, asset dispositions and sales, investments and acquisitions, liens and encumbrances, transactions with affiliates, and other matters customarily restricted in such agreements. Amounts borrowed under the Credit Facility may be repaid and, subject to customary terms and conditions, re-borrowed at any time during and up to the maturity date. Any outstanding balance under the Credit Facility is due and payable no later than January 21, 2020. As of September 30, 2016, the Company was in compliance with all such covenants.

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11. Income Taxes

The Company’s effective income tax rate for the three and nine months ended September 30, 2016 was (2056.8)% and (12.1)%, respectively, on pre-tax income (loss) of $(37) thousand and $7,235, respectively. The effective tax rate for three months ended September 30, 2016 was lower than the statutory Irish rate of 12.5% primarily due to the net loss in the period. The effective tax rate for the nine months ended September 30, 2016 was lower than the statutory Irish rate of 12.5% primarily due to the release of reserves related to uncertain tax positions upon the expiration of a statute of limitation in Ireland, income being generated in a jurisdiction that has a lower tax rate than the Irish statutory rate and the Irish research and development tax credit.

The Company’s effective income tax rate for the three and nine months ended September 30, 2015 was (4.4)% and 7.9%, respectively, on pre-tax income of $8,443 and $28,203, respectively. The effective tax rate for the three and nine months ended September 30, 2015 was lower than the statutory Irish rate of 12.5% primarily due to the release of various historical uncertain tax positions including interest and penalties in the third quarter and by research and development tax credits in Ireland. These decreases were partially offset by the recording of uncertain tax positions. The Company made a change to its organizational structure in the fourth quarter of 2014 that impacted the jurisdictional mix of profits and was beneficial to our income tax rate for the three and nine months ended September 30, 2015.

It is reasonably possible that within the next 12 months the Company’s unrecognized tax benefits, inclusive of interest, may decrease by up to $328. This is primarily due to statute of limitations expiring for the recognition of these tax benefits of one of the Company’s Irish subsidiaries in 2017.

12. Share-Based Awards

2011 Stock Option and Incentive Plan

In September 2011, the Board of Directors adopted and the Company’s shareholders approved the 2011 Stock Option and Incentive Plan (the “2011 Plan”). The 2011 Plan permits the Company to make grants of incentive stock options, non-qualified stock options, restricted stock units and cash-based awards at an exercise price no less than the fair market value per share of the Company’s ordinary shares on the grant date and with a maximum term of seven years. These awards may be granted to the Company’s employees and non-employee directors. Pursuant to the terms of the 2011 Plan, the number of ordinary shares reserved for issuance under the 2011 Plan automatically increases by 4.75% of the outstanding ordinary shares issued and outstanding on an annual basis as of January 31. As of September 30, 2016, the number of ordinary shares reserved for issuance under the 2011 Plan was 7,282,645. This number is subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization.

The Company grants share-based awards with employment service conditions only (“service-based” awards) and share-based awards with both employment service and performance conditions (“performance-based” awards). The Company applies the fair value recognition provisions for all share-based awards granted or modified and records compensation costs over the requisite service period of the award based on the grant-date fair value. The straight-line method is applied to all service-based awards granted, while the graded-vesting method is applied to all performance-based awards granted. The requisite service period for service-based awards is generally four years, with restrictions lapsing evenly over the period.

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2012 Employee Share Purchase Plan

In September 2012, the Company’s Board of Directors adopted and its shareholders approved the 2012 Employee Share Purchase Plan, which became effective upon the closing of the Company’s initial public offering (“IPO”) in October 2012. The 2012 Employee Share Purchase Plan authorizes the issuance of up to 400,000 ordinary shares to participating employees.

Employees of certain subsidiaries of the Company who have been employed for at least 30 days and whose customary employment is for more than 20 hours per week are eligible to participate in the 2012 Employee Share Purchase Plan. Any employee who owns 5% or more of the voting power or value of ordinary shares is not eligible to purchase shares under the 2012 Employee Share Purchase Plan. The Company will make one or more offerings each year to its employees to purchase shares under the 2012 Employee Share Purchase Plan. The first offering began during 2013 and subsequent offerings will usually begin on each May 1st and November 1st and will continue for six-month periods, referred to as offering periods. Each eligible employee may elect to participate in any offering by submitting an enrollment form at least 15 days before the relevant offering date.

Each employee who is a participant in the 2012 Employee Share Purchase Plan may purchase shares by authorizing payroll deductions of up to 15% of his or her base compensation during an offering period. Unless the participating employee has previously withdrawn from the offering, his or her accumulated payroll deductions will be used to purchase ordinary shares on the last business day of the offering period at a price equal to 85% of the fair market value of the ordinary shares on the first business day or the last business day of the offering period, whichever is lower, provided that no more than 2,500 ordinary shares may be purchased by any one employee during each offering period. Under applicable tax rules, an employee may purchase no more than $25 worth of ordinary shares, valued at the start of the purchase period, under the 2012 Employee Share Purchase Plan in any calendar year.

The accumulated payroll deductions of any employee who is not a participant on the last day of an offering period will be refunded. An employee’s rights under the 2012 Employee Share Purchase Plan terminate upon voluntary withdrawal from the plan or when the employee ceases employment with the Company for any reason.

The 2012 Employee Share Purchase Plan may be terminated or amended by the Board of Directors at any time. An amendment that increases the number of ordinary shares that are authorized under the 2012 Employee Share Purchase Plan and certain other amendments require the approval of the Company’s shareholders.

Restricted Stock Unit Awards

In the nine months ended September 30, 2016, the Company granted service-based restricted stock units (“RSUs”) for the purchase of 1,107,111 ordinary shares and performance-based restricted stock units (“PSUs”) for the purchase of 426,804 ordinary shares with a weighted average grant-date fair value of $42.16. The RSUs have restrictions which lapse four years from the date of grant. Restrictions on the PSUs will lapse based upon the achievement of certain financial performance targets during the applicable performance period, which ends on December 31, 2016. The grant date fair value of the shares is recognized over the requisite period of performance once achievement of criteria is deemed probable. Periodically throughout the performance period, the Company estimates the likelihood of achieving performance goals. Actual results, and future changes in estimates, may differ substantially from the Company’s current estimates. If the targets are not achieved, the shares will be forfeited by the employee.

The following table summarizes unvested RSUs and PSUs activity for the nine months ended September 30, 2016:

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13. Net Income (Loss) per Share

Basic and diluted net income (loss) per share attributable to ordinary shareholders was calculated as follows for the three and nine months ended September 30, 2016 and 2015:

14. Commitments and Contingencies

Lease Commitments

The Company leases its office space under non-cancelable operating leases, some of which contain payment escalations. The Company recognizes rent expense on a straight-line basis over the non-cancelable lease term and records the difference between cash rent payments and rent expense recognized in the consolidated statements of operations as accrued rent within accrued expenses (current) and other liabilities (non-current).

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Future minimum lease payments under non-cancelable operating and capital leases at September 30, 2016 are as follows:

Data Center Agreements

The Company has agreements with various vendors to provide specialized space and services for the Company to host its software application. Future minimum payments under non-cancelable data center agreements at September 30, 2016 totaled $2,099 of which $459, $1,574 and $66 is due in the years ending December 31, 2016, 2017, and 2018, respectively.

Purchase Commitments

As of September 30, 2016, the Company had non-cancelable purchase commitments related to telecommunications, subscription fees for third-party data (such as Internet maps and posted speed limits) and subscription fees for software services totaling $5,198, of which $882, $3,346, $951 and $19 will become payable in the years ending December 31, 2016, 2017, 2018 and 2019, respectively.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising out of breach of agreements, from services to be provided by the Company, or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its Board of Directors and certain of its officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its consolidated financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its consolidated financial statements as of September 30, 2016 and December 31, 2015.

Litigation

From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. In addition, the Company may receive notification alleging infringement of patent or other intellectual property rights. Except as noted below, the Company is not a party to any material legal proceedings nor is the Company aware of any pending or threatened litigation that, in its opinion, would have a material adverse effect on its business or its consolidated financial position, results of operations or cash flows should such litigation be resolved unfavorably. The Company accrues contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

On October 27, 2015, Orthosie Systems, LLC filed a complaint against the Company (Orthosie Systems, LLC v. Fleetmatics USA, LLC et al. , Civil Action No. 2:15-cv-1681) in the United States District Court for the Eastern District of Texas alleging infringement of U.S. Patent No. 7,430,471 entitled “Method and System for Monitoring a Vehicle.” The complaint seeks unspecified damages and an injunction. On March 9, 2016, the Company filed its answer to the complaint and asserted counterclaims of noninfringement and invalidity. The parties have exchanged proposed claim constructions and a Markman hearing is currently scheduled for December 14, 2016. At this stage of the litigation, the Company is unable to estimate whether a loss is reasonably possible. While the Company does not believe that this litigation will have a material adverse effect on its business, financial condition, operating results, or cash flows, the Company cannot be assured that this will be the case.

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On August 30, 2016, Rothschild Digital Confirmation, LLC filed a complaint against the Company (Rothschild Digital Confirmation, LLC v. Fleetmatics USA, LLC et al., Civil Action No. 2:16-cv-00968) in the United States District Court for the Eastern District of Texas alleging infringement of claims 1 and 27 of U.S. Patent No. 7,456,872 (“the ’872 patent”) entitled “Device and Method of Embedding and Retrieving Information in Digital Images.” The complaint seeks unspecified damages and an injunction. On October 4, 2016, Rothschild Digital Confirmation filed an amended complaint withdrawing claim 27 and asserting infringement of claim 1 only. The Company’s answer or response to the amended complaint is due on December 9, 2016. At this stage of the litigation, the Company is unable to estimate whether a loss is reasonably possible. While the Company does not believe that this litigation will have a material adverse effect on its business, financial condition, operating results, or cash flows, the Company cannot be assured that this will be the case.

On January 12, 2016, David Gillard and Jaclyn Stramiello, individually and on behalf of all others similarly situated, filed a complaint against the Company (Gillard et al. v. Fleetmatics USA, LLC, et al., Civil Action No. 8:16-cv-81-T-27MAP) in the United States District Court for the Middle District of Florida alleging the Company’s U.S. subsidiaries violated certain provisions of the Fair Labor Standards Act (the “FLSA”) by failing to pay overtime, among other things. On February 8, 2016, the plaintiffs filed an amended complaint, which added another named party plaintiff, Troy Pate. On February 10, 2016 the Court struck the amended complaint and the plaintiffs filed their second amended complaint on February 12, 2016. The second amended complaint alleges essentially the same claims as previously alleged. The plaintiffs sought certification of the matter as a collective action under the FLSA. The FLSA permits an aggrieved person to recover as damages back pay, an equal amount of money as liquidated damages, interest and attorneys’ fees and costs. The Company filed its answer to the second amended complaint on March 11, 2016. On August 16, 2016, the parties executed a settlement agreement providing for an aggregate settlement amount of $2,102,250 consisting of the payment of $1,559,188 in back pay and liquidated damages to members of the class of business development representatives, or web sales representatives, in the Company’s U.S. offices, $17,500 in incentive fees for the named plaintiffs and one of the opt-in plaintiffs, and the Company’s agreement not to object to attorneys’ fees up to $525,562. The settlement agreement was subject to Court approval. On August 19, 2016, the parties filed a joint motion for Court approval of the settlement agreement and class certification. The Court denied the motion to approve the settlement agreement without prejudice, requested the removal of certain confidentiality provisions, and reserved ruling on the remainder of the motion pending the submission of the amended settlement agreement. On September 29, 2016, the parties jointly filed the amended settlement agreement for the same aggregate amount as set out in the August 16, 2016 settlement agreement and renewed their motion for approval. On November 4, 2016, the Court granted final approval of the settlement agreement, conditionally certified the matter as a collective action for purposes of settlement and dismissed the case with prejudice. Pursuant to the terms of the settlement agreement, the Company must appoint an administrator for payout of claims to class members, and any amounts unclaimed by the class members at the end of the payout period provided in the settlement agreement will revert to the Company.

15. Subsequent Events

On July 30, 2016, the Company entered into a definitive agreement (the “Transaction Agreement”) to be acquired by Verizon for $60.00 per ordinary share in cash (the “Acquisition”). The Acquisition was approved by the shareholders of the Company at a Court Meeting of shareholders of the Company and at an Extraordinary General Meeting of shareholders of the Company, each held on October 12, 2016. The Acquisition was subsequently sanctioned by the High Court of Ireland at a Court Hearing held on November 4, 2016. Pursuant to the terms of the Transaction Agreement, at the effective time of the scheme of arrangement under Chapter 1 of Part 9 of the Irish Companies Act of 2014 and in accordance with the Irish Takeover Panel Act 1997, Takeover Rules 2013, as amended, all of the issued share capital of the Company will be cancelled and automatically converted into the right to receive the cash payments provided for pursuant to the terms of the Transaction Agreement. Following completion of the Acquisition, the Company’s ordinary shares will be delisted from the New York Stock Exchange and will no longer trade publicly. A description of the Transaction Agreement is contained in our Current Report on Form 8-K filed with the SEC on August 1, 2016, and a copy of the Transaction Agreement is filed as Exhibit 2.1 to such report and incorporated by reference as Exhibit 2.1 to this Quarterly Report on Form 10-Q.

As previously reported, the Company entered into a Transaction Agreement (the “Transaction Agreement”) on July 30, 2016 by and among the Company, Verizon Communications Inc., a Delaware corporation (“Verizon”), and Verizon Business International Holdings B.V., a private limited company incorporated under the laws of the Netherlands and a wholly-owned subsidiary of Verizon (“Bidco”), in connection with a proposed acquisition of the entire issued and to be issued share capital of the Company, whereby Bidco will acquire all of the issued and to be issued share capital of the Company not already owned by Verizon or its subsidiaries for cash by means of a scheme of arrangement under Chapter 1 of Part 9 of the Irish Companies Act of 2014 and in accordance with the Irish Takeover Panel Act 1997, Takeover Rules2013, as amended. In accordance with the Transaction Agreement, on October 4, 2016, the Company repaid in full all amounts owed under that certain Credit Agreement, dated as of January 21, 2015, by and among the Company, Fleetmatics Development Limited, and Fleetmatics USA, LLC as the borrowers, certain financial institutions as the lenders (the “Lenders”) and Citibank, N.A., as administrative agent for the Lenders, as amended by that First Amendment to Credit Agreement, dated as of April 29, 2016 (the “Credit Agreement”) and terminated the Credit Agreement. The Company did not incur any prepayment penalties in connection with repaying and terminating the Credit Agreement.

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On November 1, 2016, the Company acquired Berlin, Germany-based TrackEasy, a SaaS-based provider of fleet management solutions in Germany and Poland. TrackEasy will add approximately 15,000 vehicles under subscription to our existing installed base.