TeleNav 2015 Annual Report Download - page 114

Table of Contents
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, 2015 , we also had foreign net operating loss carryforwards of $8.5 million , which begin to expire in fiscal 2019. Due to
uncertainty regarding our ability to utilize the foreign net operating loss carryforwards in certain jurisdictions, we have placed a valuation
allowance of $913,000 on these deferred tax assets.
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):
At June 30, 2015 , 2014 and 2013 , there were $1.7 million , $5.5 million and $4.8 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 2012 through fiscal 2014 in the U.S., for
fiscal 2011 through fiscal 2014 in state jurisdictions, and for fiscal 2010 through 2014 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 the gross unrecognized tax benefits as of June 30, 2015 could decrease (whether by payment,
release, or a combination of both) by approximately $1.3 million 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 fiscal 2015 , 2014 and 2013 , we
recognized approximately $134,000 , $278,000 and $159,000 in interest and penalties. We had accrued $493,000 and $603,000 for the payment
of interest and penalties at June 30, 2015 and 2014 , respectively.
On December 31, 2014, the research and development credit expired for federal tax purposes. The Tax Increase Prevention Act of 2014
extended the research and development credit for one year until December 31, 2014. Although the research and development credit has been
extended every year since enactment, a tax benefit cannot be recorded for the expired period until an extension has been passed and signed by
the President. If and when an extension is passed and signed with retroactive effect, a retroactive tax benefit will be recorded in the period the
extension is passed and signed. We have recorded a tax benefit for the federal research and development credit through December 31, 2014.
10. Acquisitions
skobbler GmbH
On January 29, 2014, we completed our acquisition of all of the shares of privately held skobbler GmbH, or skobbler, a navigation
company based in Germany. We acquired skobbler for consideration of approximately $23.8 million , consisting of approximately $19.2 million
in cash and $4.6 million in shares of our restricted common stock. We believe the acquisition of skobbler will enable us to combine its OSM-
based GPS navigation technology with our existing mobile navigation solutions. 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 fair value of acquisition consideration of $23.8 million was comprised of $19.2 million in cash and 731,623 shares of our
common stock valued at $4.6 million . The 731,623 shares of our common stock are held in escrow and will be
F-29
Fiscal Year Ended June 30,
2015 2014 2013
Unrecognized tax benefit—beginning of period
$
6,931
$
6,340
$
4,431
Increase in tax positions taken during the current period
562
623
2,157
Increase in tax positions taken during the prior period
170
555
219
Decrease in tax positions taken during the prior period
—
(
261
)
(467
)
Decrease in tax positions due to settlements
(600
)
—
—
Lapse of statute of limitations
(949
)
(326
)
—
Unrecognized tax benefit—end of period
$
6,114
$
6,931
$
6,340