TeleNav 2013 Annual Report Download - page 59

Table of Contents
At June 30, 2013 , we had a liability for unrecognized tax benefits and an accrual for the payment of related interest totaling $5.8 million . Due
to uncertainties related to these tax matters, we are unable to make a reasonably reliable estimate of when cash settlements with the taxing authority
will occur.
Warranties and indemnifications
Our agreements with our customers generally include certain provisions for indemnifying them against liabilities if our navigation services or
products infringe a third party’s intellectual property rights or for other specified reasons. We have in the past received indemnification requests or
notices of their intent to seek indemnification in the future from our customers with respect to litigation in which our customers have been named as
defendants. See Part I, Item 3, “Legal Proceedings.” As it relates to past indemnification requests or notices, in certain situations we have agreed to
defend or indemnify our customers for the indemnity demands. For those notices where we have not agreed to provide indemnity or defense to date,
or future demands for indemnity, we may in the future agree to defend and indemnify our customers, irrespective of whether we believe that we have
an obligation to indemnify them or whether we believe our navigation services and products infringe the asserted intellectual property rights.
Alternatively, we may reject certain of our customers’ indemnity demands, including the outstanding demands, which may lead to disputes with our
customers, negatively impact our relationships with them or result in litigation against us. Our customers may also claim that any rejection of their
indemnity demands constitutes a material breach of our agreements with them, allowing them to terminate such agreements. If, as a result of
indemnity demands, we make substantial payments, our relationships with our customers are negatively impacted, or any of our customer agreements
is terminated, our business, operating results and financial condition could be materially harmed. As of June 30, 2013 , any costs in connection with
such indemnity demands which are probable and estimable have been recorded in our consolidated financial statements.
We have agreed to indemnify our directors, officers and certain other employees for certain events or occurrences, subject to certain limits,
while such persons are or were serving at our request in such capacity. We may terminate the indemnification agreements with these persons upon
the termination of their services with us, but termination will not affect claims for indemnification related to events occurring prior to the effective
date of termination. The maximum amount of potential future indemnification is unlimited. We have a director and officer insurance policy that
limits our potential exposure. We believe the fair value of these indemnification agreements is minimal. We have not recorded any liabilities for these
agreements as of June 30, 2013 .
Off-balance sheet arrangements
During fiscal 2013 , 2012 and 2011
, we did not have any relationships with unconsolidated entities or financial partnerships, such as structured
finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other
contractually narrow or limited purposes.
Recent accounting pronouncements
In June 2011, the FASB issued amended guidance to require an entity to present total comprehensive income, the components of net income,
and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but
consecutive statements. The amended guidance eliminates the current option to present the components of other comprehensive income as part of the
statement of equity. We adopted this amendment retrospectively during the three months ended September 30, 2012, electing to present the required
information in two separate but consecutive statements. The adoption of this guidance affected financial statement presentation only and did not
otherwise have a material effect on our consolidated financial statements.
In September 2011, the FASB issued a revised standard for testing goodwill for impairment. The revised standard is intended to reduce the cost
and complexity of the annual goodwill impairment test by providing entities an option to perform a “qualitative” assessment to determine whether
further impairment testing is necessary. We adopted this standard during the three months ended September 30, 2012. The adoption of this standard
did not have a material effect on our consolidated financial statements.
In July 2012, the FASB issued amended guidance to simplify the testing of indefinite-lived intangible assets other than goodwill for
impairment. The amendment becomes effective for annual and interim impairment tests performed for fiscal years beginning on or after
September 15, 2012 and earlier adoption is permitted. The adoption of this guidance is not expected to have a material effect on our consolidated
financial statements.
53
(2) Consists of minimum noncancelable financial commitments primarily related to fees owed to certain third party content providers, regardless
of usage level.