F-18
For the market comparable approaches, we evaluated comparable company public trading values, and valued our reporting units
using multiples of EBITDA ranging from approximately 6 to 8 times. Comparable company public trading values are based on the
market’s view of future industry conditions and the comparable companies’ future financial results. Adverse changes in any of these
variables would negatively influence the valuation of our reporting units. It is not possible to determine the impact of such potential
adverse changes on the valuation of our reporting units.
Our discounted cash flow models are based on our most recent long-range forecast and, for years beyond the forecast, we
estimated terminal values based on estimated exit multiples ranging from approximately 6 to 7 times the final forecasted year
EBITDA. They reflect management’s expectation of future market conditions and expected levels of financial performance for our
reporting units, as well as discount rates and estimated terminal values that would be used by market participants in an arms-length
transaction. Business operational risks which could impact profits are detailed in our “Risk Factors” disclosures. Discount rates used
were intended to reflect the risks inherent in the future cash flows of the respective reporting units and were between 13 and 15%.
In the second quarter of 2012, we received notice from a significant navigation application customer that it intended to
adjust pricing for TCS services. Management considered this to be an indicator that we should evaluate the long-lived assets
(including goodwill and other intangible assets) related to the Company’s 2009 acquisition of Networks In Motion, operating as the
Company’s Navigation unit, for potential impairment. No triggering events occurred with regard to other reporting units, so an interim
analysis of other units was not completed.
We completed Step 1 of the goodwill impairment testing in 2012 for the Navigation reporting unit using a discounted cash flow
method supported by a market comparable approach. The discounted cash flow model was based on our updated long-range forecast
for the Navigation reporting unit. For years beyond the forecast, we estimated terminal value using a discount rate of 12% and a
perpetual cash flow growth rate of 3%. For the market comparable approach, we evaluated comparable company public trading
values, using revenue and EBITDA multiples. The estimated fair value of the Navigation reporting unit was compared to the carrying
amount including goodwill, and the results of the Step 1 goodwill testing indicated a potential impairment.
Accordingly, we proceeded with Step 2 of the impairment test to measure the amount of potential impairment. We allocated the
fair value of the Navigation reporting unit to its assets and liabilities as of the date of the impairment analysis. As a result of the
analysis described above, a goodwill impairment charge was of $86,332 recorded in 2012 for the excess of the carrying value of
goodwill over the estimated fair value.
There was no indication of any further impairment in any of our reporting units during the 2012 annual testing and accordingly,
the second step of the goodwill impairment analysis was not performed. For fiscal 2011, all of our reporting units passed the first step
of the goodwill impairment testing, indicating no impairment.
10. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses at December 31 were:
2013
2012
Accounts payable ..................................................................................... $ 10,341 $ 15,929
Accrued expenses.....................................................................................
14,031
21,774
Total accounts payable and accrued expenses ................................ $ 24,372 $ 37,703
Accrued expenses consist primarily of costs incurred for which we have not yet been invoiced, accrued sales taxes, and amounts
due to our E9-1-1 customers that we have billed and collected from regulating agencies on their behalf under cost recovery
arrangements.
11. Line of Credit
We have maintained a line of credit arrangement with our principal bank since 2003. On June 25, 2013, we closed on a new
Senior Secured Credit Facility (the “Senior Credit Facility”), with the Silicon Valley Bank and a syndicate of lenders. The Senior
Credit Facility includes a new revolving loan facility (“Revolving Loan Facility”) replacing the line under the July 2012, Fourth
Amendment to our previous Loan and Security Agreement (“Line of Credit”).
The Revolving Loan Facility includes an aggregate principal amount available to borrow of up to $30,000 and matures on
March 31, 2018, unless extended by as provided in the Credit Agreement. The principal amount outstanding under the Revolving
Loan Facility is payable prior to or on the maturity date. Interest on the Revolving Loan Facility is payable monthly and accrues at
Eurodollar/LIBOR (beginning at L+3.75%) or Alternate Base Rate (“ABR”) (beginning at ABR +2.75%), which may be adjusted as
provided in the Credit Agreement.
