TeleNav 2014 Annual Report Download - page 61

Table of Contents
of sales and marketing personnel increased 9% to 101 at June 30, 2014 from 93 at June 30, 2013 . We expect that our sales and marketing
expenses will continue to increase over time in absolute dollars as we invest in sales personnel and related support functions fort our growing
advertising business.
General and administrative . Our general and administrative expenses increased 6% to $26.2 million in fiscal 2014 from $24.8 million in
fiscal 2013 , including $1.1 million in skobbler acquisition related costs. The increase was primarily due to increased compensation and benefits
of $0.8 million, increased stock compensation expense of $0.9 million and increased professional services fees of $0.8 million, partially offset by
decreased legal costs of $1.4 million. The total number of general and administrative personnel decreased 7% to 66 at June 30, 2014 from 71 at
June 30, 2013 . As a percentage of revenue, general and administrative expenses increased to 17% in fiscal 2014 from 13% in fiscal 2013 . We
anticipate that our general and administrative expenses may vary substantially from period to period as we incur legal expenses associated with
ongoing intellectual property litigation and requests for indemnification related to intellectual property litigation proceed, as well as one-time
costs related to the acquisition of companies such as skobbler.
Restructuring costs . We incurred restructuring costs of $4.4 million in fiscal 2014 in order to further align our resources and consolidate
facilities. We initiated a restructuring plan consisting of reductions of approximately 108 full-time positions in the U.S. and China and we
recorded restructuring charges of $2.4 million related to severance and benefits for the positions eliminated. In addition, we closed our Boston
office and consolidated our Sunnyvale headquarters facilities from two buildings into one and recorded restructuring charges of $2.0 million
related to the impairment of our facility leases.
We incurred restructuring costs of $1.7 million in fiscal 2013 in order to better align and focus our resources around our strategic growth
areas. We initiated a restructuring plan consisting of reductions of approximately 83 full-time positions in the U.S. and China and we recorded
restructuring charges of $1.5 million related to severance and benefits for the positions eliminated. In addition, we consolidated our Shanghai
office facilities and recorded restructuring charges of $0.1 million related to the forfeiture of our lease deposit. We also recorded restructuring
charges of $0.1 million related to the write-off of certain assets that were no longer useful to us based upon the changes in our business.
Other income, net . Our other income, net was $1.3 million in fiscal 2014 and $1.2 million in fiscal 2013 .
Income from discontinued operations, net . Our income from discontinued operations, net was $7.5 million in fiscal 2013 and includes a
gain of $6.5 million realized on the sale of our enterprise business, net of tax. We had no discontinued operations in fiscal 2014.
Provision (benefit) for income taxes . Our provision (benefit) for income taxes, excluding discontinued operations, decreased to $(4.0)
million in fiscal 2014 from $1.1 million in fiscal 2013 . Our effective tax rate, excluding discontinued operations, was 12% in fiscal 2014
compared to 16% in fiscal 2013 . Our effective tax rate in fiscal 2014 was lower than the tax computed at the U.S. federal statutory income tax
rate due primarily to the increase to the valuation allowance which resulted in additional federal tax expense of $7.0 million.
The usage of our remaining U.S. federal and state loss carryforwards at June 30, 2014 of approximately $2.3 million and $26.5 million,
respectively, is substantially limited each fiscal year by Section 382 of the Internal Revenue Code.
As of June 30, 2014 , our cumulative unrecognized tax benefit was $6.9 million, of which $1.5 million was netted against deferred tax
assets. Included in the other long-term liabilities are unrecognized tax benefits at June 30, 2014 of $5.5 million that, if recognized, would affect
the annual effective tax rate.
We believe it is reasonably possible that, as of June 30, 2014, the gross unrecognized tax benefits could decrease (whether by payment,
release, or a combination of both) by approximately $1.6 million in the next 12 months. We recognize interest and penalties related to
unrecognized tax benefits as part of our provision for income taxes. We had $0.6 million and $0.3 million accrued for the payment of interest
and penalties at June 30, 2014 and 2013, respectively.
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 expected losses in fiscal 2015 and potentially
future years in the U.S., we established in fiscal 2014 a valuation allowance on deferred tax assets in the U.S. that we believe will not be realized
by the carryback provisions of U.S. tax law. U.S. tax law allows for the two-year carryback of losses and one-year carryback of credits to
previous tax years which can generate a tax refund to the extent taxes were paid. 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. Our valuation allowance
increased from the prior fiscal year by approximately $10.1 million, $0.7 million and $0.3 million in fiscal 2014, 2013 and 2012, respectively.
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