TeleNav 2015 Annual Report Download - page 27

Table of Contents
Our effective tax rate may fluctuate, which could reduce our anticipated income tax benefit in the future.
Our effective tax rate could be adversely affected by several factors, many of which are outside of our control. Our effective tax rate may
be affected by the proportion of our revenues and income (loss) before taxes in the various domestic and international jurisdictions in which we
operate. Our revenue and operating results are difficult to predict and may fluctuate substantially from quarter to quarter. We are also subject to
changing tax laws, regulations and interpretations in multiple jurisdictions in which we operate, as well as the requirements of certain tax and
other accounting body rulings. Since we must estimate our annual effective tax rate each quarter based on a combination of actual results and
forecasted results of subsequent quarters, any significant change in our actual quarterly or forecasted annual results may adversely impact the
effective tax rate for the period. Our estimated annual effective tax rate may fluctuate for a variety of reasons, including:
Although we believe our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial
statements and may materially affect our financial results in future periods. In fiscal 2014, we recorded a valuation allowance on the majority of
our deferred tax assets, net of liabilities since the assets are not more likely than not to be realized based upon our assessment of all positive and
negative evidence. Realization of deferred tax assets is dependent upon future taxable earnings, the timing of which is uncertain. Due to losses in
fiscal 2014 and 2015, and expected losses in fiscal 2016 and potentially future years in the U.S., we maintained a full valuation allowance on
deferred tax assets in the U.S. Due to foreign operating losses in previous years and continued foreign earnings volatility, we continued to
maintain a full valuation allowance for our foreign deferred tax assets in China, Brazil and the United Kingdom. In the event deferred tax assets
cannot be realized based upon the ability to carryback losses and credits within the carryback period, our effective tax rate would be negatively
impacted.
We rely on our customers for timely and accurate subscriber and vehicle sales information. A failure or disruption in the provisioning of this
data to us would materially and adversely affect our ability to manage our business effectively.
We rely on our automotive and OEM customers to provide us with reports on the number of vehicles they sell with our on-board and
brought-in navigation services included and to remit royalties for those sales to us. We also rely on our wireless carrier customers to bill
subscribers and collect monthly fees for our mobile navigation services, either directly or through third party service providers. If our customers
or their third party service providers provide us with inaccurate data or experience errors or outages in their own billing and provisioning
systems when performing these services, our revenue may be less than anticipated or may be subject to adjustment with the customer. In the
past, we have experienced errors in wireless carrier reporting. If we are unable to identify and resolve discrepancies in a timely manner, our
revenue may vary more than anticipated from period to period and this could harm our business, operating results and financial condition.
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• impacts from our inability to benefit from the carryback of net losses expected to be incurred in fiscal 2016 and thereafter due to the
limitations of the two year loss carryback for federal tax purposes.
•
changes in forecasted annual operating income or loss by jurisdiction;
•
changes in relative proportions of revenue and income or loss before taxes in the various jurisdictions in which we operate;
•
changes to the valuation allowance on net deferred tax assets;
• changes to actual or forecasted permanent differences between book and tax reporting, including the tax effects of purchase
accounting for acquisitions and non-recurring charges which may cause fluctuations between reporting periods;
•
impacts from any future tax settlements with state, federal or foreign tax authorities;
• impacts from increases or decreases in tax reserves due to new assessments of risk, the expiration of the statute of limitations or the
completion of government audits;
• impacts from changes in tax laws, regulations and interpretations in the jurisdictions in which we operate, as well as the requirements
of certain tax rulings;
• impacts from withholding requirements in various non-U.S. jurisdictions and our ability to recoup those withholdings, which may
depend on how much revenue we have in a particular jurisdiction to offset the related expenses;
•
impacts from acquisitions and related integration activities; or
•
impacts from new FASB requirements.