TeleNav 2010 Annual Report Download - page 83

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TELENAV, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Foreign currency translation
The functional currency of our foreign subsidiaries is the local currency. Adjustments resulting from
translating foreign functional currency financial statements into U.S. dollars are recorded as part of a separate
component of comprehensive income in stockholders’ equity (deficit). Foreign currency transaction gains and
losses are included in our net income for each year. All assets and liabilities denominated in a foreign currency
are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenue and expenses are
translated at the average monthly exchange rates during the year. Equity transactions are translated using
historical exchange rates. Foreign currency transaction gain (loss) was $(81,000), $(223,000) and $65,000 for
fiscal 2010, 2009 and 2008, respectively.
Cash and cash equivalents
We consider all highly liquid financial instruments with original maturities of 90 days or less to be cash
equivalents. Cash equivalents are stated at cost, which approximates fair value. Our cash equivalents include
interest-bearing money-market funds.
Concentrations of risk and significant customers
Financial instruments that subject us to significant concentrations of credit risk primarily consist of cash and
cash equivalents and accounts receivable. We maintain our cash and cash equivalents with well-capitalized
financial institutions. Cash equivalents consist primarily of money-market accounts. Our primary customers are
wireless carriers and we do not require collateral for accounts receivable. To manage the credit risk associated
with accounts receivable, we evaluate the creditworthiness of our wireless carrier partners. We evaluate our
accounts receivable on an ongoing basis to determine those amounts not collectible. To date, we are not aware of
circumstances that may impair a specific wireless carrier partner’s ability to meet its financial obligations to us.
Revenue related to services provided through Sprint Nextel Corporation, or Sprint, comprised 55%, 61%
and 62% of revenue for fiscal 2010, 2009 and 2008, respectively. Receivables due from Sprint were 49% and
58% of total accounts receivable at June 30, 2010 and 2009, respectively. Revenue related to services provided
through AT&T Inc., or AT&T, comprised 34%, 29% and 26% of revenue for fiscal 2010, 2009 and 2008,
respectively. Receivables due from AT&T were 38% and 29% of total accounts receivable at June 30, 2010 and
2009, respectively.
Our map and points of interest data have been provided principally through Tele Atlas and NAVTEQ in
fiscal 2010, 2009 and 2008. To date, we are not aware of circumstances that may impair either party’s intent or
ability to continue providing such services to us.
Fair value of financial instruments
The estimated fair market value of financial instruments, which include cash and cash equivalents, accounts
receivable, accounts payable, and accrued expenses, approximates the carrying values of those instruments due to
their relatively short maturities.
We have established a hierarchy, which consists of three levels, for disclosure of the inputs used to
determine the fair value of our financial instruments. Level 1 valuations are based on quoted prices in active
markets for identical assets or liabilities. Level 2 valuations are based on inputs that are observable, either
directly or indirectly, other than quoted prices included within Level 1. Level 3 valuations are based on
information that is unobservable and significant to the overall fair value measurement. The valuations of our cash
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