TeleNav 2013 Annual Report Download - page 51

Table of Contents
which we make the determination. During fiscal 2013 and 2011, we recorded a loss of $339,000 and $714,000, respectively, in connection with
impairment in the carrying value of capitalized software.
Goodwill . Goodwill represents the excess of the aggregate purchase price paid over the fair value of the net assets acquired. Goodwill is not
amortized and is tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be
recoverable. These tests are based on our single operating segment and reporting unit structure. We first assess qualitative factors to determine
whether it is necessary to perform the two-step quantitative goodwill impairment test. We are not required to calculate the fair value of our reporting
unit unless we determine, based on a qualitative assessment, that it is more likely than not that the fair value is less than our carrying amount. If we
determine it is more likely than not that the fair value of the reporting unit is less than its carrying value, we perform a two-step quantitative goodwill
impairment test. The first step of the impairment test involves comparing the fair value of the reporting unit to its net book value, including goodwill.
If the net book value exceeds its fair value, then we would perform the second step of the goodwill impairment test to determine the amount of the
impairment loss, if any. In assessing the fair value of our reporting unit, we make assumptions regarding our estimated future cash flows, including
estimate growth rate. If our estimates or related assumptions change in the future, or if our net book value were to exceed our market capitalization,
we may be required to record impairment loss related to our goodwill. We have not recognized any impairment of goodwill in the three year period
ended June 30, 2013. As of June 30, 2013, we had goodwill of $14.4 million.
Stock-based compensation expense . We account for stock-based employee compensation arrangements under the fair value recognition
method, which requires us to measure the stock-based compensation costs of share-based compensation arrangements based on the grant date fair
value, and recognize the costs in the financial statements over the employees’ requisite service period. We recognize compensation expense for the
fair value of these awards with time based vesting on a straight-line basis over an employee’s requisite service period of each of these awards, net of
estimated forfeitures.
Our stock-based compensation expense was as follows:
As of June 30, 2013 , there was $7.5 million of unrecognized stock-
based compensation expense related to unvested stock option awards, net of
estimated forfeitures, that we expect to be recognized over a weighted average period of 2.3 years. At June 30, 2013, the total unrecognized stock-
based compensation cost related to restricted stock units was $9.2 million , net of estimated forfeitures, and will be amortized over a weighted
average period of 3.6 years.
We generally utilize the Black-Scholes option-
pricing model to determine the fair value of our stock option awards, which requires a number of
estimates and assumptions. In valuing share-based awards under the fair value accounting method, significant judgment is required in determining
the expected volatility of our common stock and the expected term individuals will hold their share-based awards prior to exercising. The expected
volatility of our stock is based on the historical volatility of various comparable companies, as we do not have sufficient historical data with regards
to the volatility of our own stock. The expected term of options granted represents the period of time that options granted are expected to be
outstanding. The expected term was based on an analysis of our historical exercise and cancellation activity. In the future, as we gain historical data
for volatility in our own stock, the expected volatility and expected term may change which could substantially change the grant date fair value of
future awards of stock options and ultimately the expense we record. In addition, the estimation of stock awards that will ultimately vest requires
judgment, and to the extent actual results differ from our estimates, such amounts will be recorded as an adjustment in the period estimates are
revised.
For fiscal 2013 , 2012 and 2011 , we calculated the fair value of options granted to employees with the following weighted average
assumptions:
45
Fiscal Year Ended June 30,
2013 2012 2011
(in thousands)
Cost of revenue
$
149
$
91
$
97
Research and development
3,509
2,509
1,965
Selling and marketing
2,290
1,168
1,003
General and administrative
2,699
1,354
1,072
Total stock-based compensation expense
$
8,647
$
5,122
$
4,137