TeleNav 2013 Annual Report Download - page 97

Table of Contents
At June 30, 2013, 2012 and 2011, there were $4.8 million , $3.6 million , and $3.7 million of unrecognized tax benefits that if recognized
would affect the annual effective tax rate.
We file income tax returns in the U.S. federal jurisdiction, California, various states, and foreign tax jurisdictions in which we have
subsidiaries. During fiscal 2012, the IRS concluded its audit of our fiscal 2009 through fiscal 2010 tax returns, which resulted in no adjustments
having a material impact on our financial statements. The statute of limitations remains open for fiscal 2011 through fiscal 2012 in the U.S., for fiscal
2009 through fiscal 2012 in state jurisdictions, and for fiscal 2008 through 2012 in foreign jurisdictions. Fiscal years outside the normal statute of
limitation remain open to audit by tax authorities due to tax attributes generated in those early years which have been carried forward and may be
audited in subsequent years when utilized.
We believe it is reasonably possible that, as of June 30, 2013, the gross unrecognized tax benefits could decrease (whether by payment, release,
or a combination of both) by as much as $800,000
in the next 12 months. We recognize interest and penalties related to unrecognized tax positions as
part of our provision for federal, state and foreign income taxes. During the fiscal years ended June 30, 2013, 2012 and 2011, we recognized
approximately $159,000 , $101,000 , and $109,000 in interest and penalties. We had accrued $314,000 and $181,000 for the payment of interest and
penalties at June 30, 2013 and 2012, respectively.
On January 2, 2013, the President signed into law The American Taxpayer Relief Act of 2012. Under prior law, a taxpayer was entitled to a
research tax credit for qualifying amounts paid or incurred on or before December 31, 2011. The 2012 Taxpayer Relief Act extended the research
credit for two years to December 31, 2013. The extension of the research credit is retroactive and includes amounts paid or incurred after December
31, 2011. The retroactive fiscal 2012 and 2013 benefits of $1.2 million have been reflected in the fiscal 2013 effective tax rate.
10. Acquisition
On October 10, 2012, we completed our acquisition of privately held Local Merchant Services, Inc., or ThinkNear, a California-based hyper-
local mobile advertising company. We acquired 100% of the outstanding stock of ThinkNear for consideration of approximately $22.5 million ,
consisting of approximately $18.4 million in cash, plus restricted shares of our common stock and assumed stock options. The acquisition of
ThinkNear will enable us to combine its location ad targeting technology with our existing advertising solution to create a new mobile local
advertising platform. The transaction has been accounted for under the acquisition method of accounting.
We recorded the assets acquired and liabilities assumed at their estimated fair value, with the difference between the fair value of the net assets
acquired and the purchase consideration reflected as goodwill.
The total purchase consideration of $18.4 million was comprised of cash. In addition to cash, we issued 586,580 shares of restricted common
stock, and assumed options to acquire 74,491 shares (on an as-converted basis) of our common stock. The fair value of the restricted shares and
assumed options issued in connection with the acquisition was $4.1 million , which is being accounted for as post-combination stock-based
compensation. The $3.6 million fair value of the restricted shares and the $457,000 fair value of the assumed options will be amortized over a
weighted average period of 1.78 years and 2.82 years, respectively.
The fair value of our common stock issued in connection with the acquisition was determined to be $6.23 per share, the closing price of our
common stock on the acquisition measurement date, which is the date the acquisition closed. The weighted average fair value of the assumed stock
options to purchase 74,491 shares of our common stock was $6.13 per share based on the Black-Scholes fair value on the acquisition measurement
date.
The following table reflects the values of the assets acquired and liabilities assumed as of the acquisition date (in thousands):
F-24
Fiscal Year Ended June 30,
2013 2012 2011
Unrecognized tax benefit—beginning of period
$
4,431
$
4,520
$
2,924
Increase in tax positions taken during the current period
2,157
1,200
1,578
Increase in tax positions taken during the prior period
219
101
96
Decrease in tax positions taken during the prior period
(467
)
(1,390
)
(78
)
Unrecognized tax benefit—end of period
$
6,340
$
4,431
$
4,520