TeleNav 2013 Annual Report Download - page 96

Table of Contents
Our provision for income taxes, excluding discontinued operations, decreased to $1.1 million in fiscal 2013 from $13.6 million in fiscal 2012.
Our effective tax rate, excluding discontinued operations, was 16% in fiscal 2013 compared to 30% in fiscal 2012. Our effective tax rate in fiscal
2013 was lower than the tax computed at the U.S. federal statutory income tax rate due primarily to the R&D credit and changes in intercompany
arrangements, partially offset by nondeductible stock compensation. Our effective tax rate, excluding discontinued operations, was 39% in fiscal
2011.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant components of our net deferred tax assets were as follows (in
thousands):
During fiscal 2013, the net increase to the valuation allowance was $699,000 primarily for an unrealized loss on investments and California
research and development credits that are not expected to be realized due to the expected effect of the California single sales factor apportionment
election and the level of forecasted taxable income in the state. As of June 30, 2013, the valuation allowance was attributable to both state and foreign
net operating loss carryforwards, unrealized loss on investments, and California research and development credits.
We provide for U.S. income taxes on the earnings of foreign subsidiaries unless the subsidiaries' earnings are permanently reinvested outside
the U.S. To the extent that the foreign earnings previously treated as permanently reinvested are repatriated, the related U.S. liability may be reduced
by any foreign income taxes paid on these earnings. As of June 30, 2013, the cumulative amount of earnings upon which U.S. income taxes have not
been provided was approximately $2.7 million . The unrecognized deferred tax liability for these earnings was approximately $343,000 .
As of June 30, 2013, we had federal and California net operating loss carryforwards for income tax purposes of $2.3 million and $9.7 million ,
respectively. These loss carryforwards will begin to expire in fiscal 2020 for federal purposes and fiscal 2016 for California purposes. In addition, we
had federal and California research and development tax credit carryforwards of $384,000 and $1.9 million , respectively, as of June 30, 2013. The
federal research credits will begin to expire in fiscal 2023 and the California research credits can be carried forward indefinitely. The loss
carryforwards and certain credits are subject to annual limitation under Internal Revenue Code Section 382.
As of June 30, 2013, we also had foreign net operating loss carryforwards of $3.0 million , which begin to expire in fiscal 2019. Due to
uncertainty regarding our ability to utilize the foreign net operating loss carryforwards, we have continued to maintain a full valuation allowance for
these deferred tax assets.
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):
F-23
June 30,
2013 2012
Deferred tax assets:
Federal, state and foreign net operating losses
$
2,237
$
3,023
Federal and state tax credits
1,475
256
Stock-based compensation
3,107
2,167
Accrued expenses and reserves
6,309
6,889
Capitalized expense
490
588
Unrealized loss on investments
—
29
Total deferred tax assets:
13,618
12,952
Deferred tax liabilities:
Property and equipment
(2,527
)
(3,487
)
Capitalized software
(1,606
)
(2,672
)
Acquired intangible assets
(1,590
)
(294
)
Unrealized gains on investments
(344
)
—
Total deferred tax liabilities:
(6,067
)
(6,453
)
Net deferred tax assets:
7,551
6,499
Valuation allowance
(2,913
)
(2,214
)
Net deferred tax assets:
$
4,638
$
4,285