F-9
Marketable Securities.
Our marketable securities are classified as available-for-sale. Our primary objectives when investing
are to preserve principal, maintain liquidity, and obtain higher yield. Our intent is not specifically to invest and hold securities with
longer term maturities. We have the ability and intent, if necessary, to liquidate any of these investments in order to meet our
operating needs within the next twelve months. The securities are carried at fair market value based on quoted market price with net
unrealized gains and losses in stockholders’ equity as a component of accumulated other comprehensive income. If we determine that
a decline in fair value of the marketable securities is other than temporary, a realized loss would be recognized in earnings. Gains or
losses on securities sold are based on the specific identification method and are recognized in earnings. We recorded immaterial net
gains on the sale and maturity of marketable securities for the years ended December 31, 2013, 2012, and 2011 in Other income
(expense), net.
Allowances for Doubtful Accounts Receivable.
Substantially all of our accounts receivable are trade receivables generated in
the ordinary course of our business. We use estimates to determine the amount of the allowance for doubtful accounts necessary to
reduce accounts receivable to their expected net realizable value. We estimate the amount of the required allowance by reviewing the
status of significant past-due receivables and by establishing provisions for estimated losses by analyzing current and historical bad
debt trends. Changes to our allowance for doubtful accounts are recorded as a component of general and administrative expenses in
our accompanying Consolidated Statements of Operations. Our credit and collection policies and the financial strength of our
customers are critical to us in maintaining a relatively small amount of write-offs of receivables. We generally do not require collateral
from or enter netting agreements with our customers. Receivables that are ultimately deemed uncollectible are charged-off as a
reduction of receivables and the allowance for doubtful accounts.
Inventory.
We maintain inventory of component parts and finished product for our deployable communications systems.
Inventory is stated at the lower of cost or market value. Cost is based on the weighted average method. The cost basis for finished
units includes manufacturing cost.
Property and Equipment.
Property and equipment represents costs associated with our investment in information technology
and telecommunications equipment, software, furniture and fixtures, leasehold improvements, as well as capitalized software
developed for internal use, including hosted applications. Property and equipment is stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method based on the estimated useful lives of the assets, generally five years for
furniture, fixtures, and leasehold improvements and three to seven years for other types of assets including computers, software, and
telephone equipment.
The carrying value of property and equipment is reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset or group of assets may not be fully recoverable. If an impairment indicator is present, we evaluate
recoverability by a comparison of the carrying amount of the assets to future undiscounted net cash flows that we expect to generate
from these assets. If the assets are impaired, we recognize an impairment charge equal to the amount by which the carrying amount
exceeds the fair value of the assets using the appropriate valuation technique of market, income or cost approach. Assets to be
disposed of are reported at the lower of carrying values or fair values, less estimated costs of disposal.
In 2013 and 2012, after adjusting projections for decreased expected revenue from services supported by our capitalized
software for internal use included in property and equipment, we evaluated the recoverability of our Platforms and Applications and
Navigation reporting units’ fixed assets, respectively, by comparing the carrying amount of the assets to future undiscounted net cash
flows that we expect to generate from these assets. As a result of our review, we recorded an impairment charge of $12,565 and
$12,987, respectively. No impairment charges were recorded in 2011.
Goodwill.
Goodwill represents the excess of cost over the fair value of assets of acquired businesses. Goodwill is not
amortized, but instead is evaluated for impairment in the fourth quarter of each year, or sooner should there be an indicator of
impairment. We may assess qualitative factors to determine whether it is more likely than not an event or circumstance might indicate
the fair value of the reporting unit is less than its carrying value. Such indicators include a sustained, significant decline in the
Company’s stock price and market capitalization, a decline in the Company’s expected future cash flows, a significant adverse change
in legal factors or in the business climate, unanticipated competition, and/or slower expected growth, among others. After completing
our assessment of such qualitative factors, and if it is determined that it is more likely than not that the fair value of a reporting unit is
less than its carrying value we perform a two-step process. The first step requires a comparison of the book value of net assets to the
fair value of the reporting units that have goodwill assigned to them. If the fair value is determined to be less than the book value, a
second step is performed to compute the amount of the impairment. In the second step, a fair value for goodwill is estimated, based in
part on the fair value of the reporting unit used in the first step, and is compared to its carrying value. The shortfall of the fair value
below carrying value, if any, would represent the amount of goodwill impairment.
For goodwill impairment testing, we have four reporting units. In 2013, we reorganized the Commercial Segment in order to
better conform and integrate the product lines and create efficiencies, so that one management team is now responsible for all
Commercial
Platforms & Applications
other than the 9-1-1
Safety and Security
part of the Commercial Segment. Previously, our
