|12 Months Ended|
Dec. 31, 2012
|Income Taxes [Abstract]|
The total (benefit) provision for income taxes consists of the following (in thousands):
The Company has significant losses in 2012, 2011 and 2010 and as such there was no material income tax expense for the years ended December 31, 2012, 2011 and 2010. The income tax benefit in 2012 primarily relates to federal refundable credit true-up from prior year.
The significant components of net deferred tax assets as of December 31, 2012 and 2011 were as follows (in millions):
The net (decrease) increase in the valuation allowance was $(6.0) million, $25.8 million and $24.4 million for the years ended December 31, 2012, 2011 and 2010, respectively.
As of December 31, 2012, the Company had federal net operating loss carry-forwards of approximately $137.1 million, state net operating loss carry-forwards of approximately $134.9 million and foreign net operating loss carry-forwards of approximately $772.3 million to offset future taxable income. The net operating loss carry-forwards include $0.5 million which relates to stock option deductions that will be recognized through additional paid in capital when utilized. As such these deductions are not reflected in the Company's deferred tax assets. No federal net operating loss carry-forward expired in 2012, 2011 and 2010. California net operating losses of $10.4 million, $9.5 million and $0.3 million expired in the years 2012, 2011 and 2010, respectively. There is no expiration for the foreign net operating loss.
ASC 740 provides for the recognition of deferred tax assets if realization of such assets is more likely than not. Based upon the weight of available evidence, which includes the Company's historical operating performance and carry-back potential, the Company has determined that total deferred tax assets should be fully offset by a valuation allowance.
Based on an analysis under Section 382 of the Internal Revenue Code (which subjects the amount of pre-change NOLs and certain other pre-change tax attributes that can be utilized to an annual limitation), the Company experienced ownership changes in 2009 and 2012 which substantially limit the future use of its pre-change NOLs and certain other pre-change tax attributes per year. The Company has excluded the NOLs and R&D credits that will expire as a result of the annual limitations in the deferred tax assets as of December 31, 2012. To the extent that the Company does not utilize its carry-forwards within the applicable statutory carry-forward periods, either because of Section 382 limitations or the lack of sufficient taxable income, the carry-forwards will expire unused.
The Company files income tax returns in the U.S. federal jurisdiction, State of California and Ireland. The Internal Revenue Service has completed an audit of the Company's 2009 and 2010 federal income tax returns which resulted in no change. The Company's federal income tax returns for tax years 2011 and beyond remain subject to examination by the Internal Revenue Service. The Company's California and Irish income tax returns for tax years 2008 and beyond remain subject to examination by the Franchise Tax Board and Irish Revenue Commissioner. In addition, all of the net operating losses and research and development credit carry-forwards that may be used in future years are still subject to adjustment.
The following table summarizes the Company's activity related to its unrecognized tax benefits (in thousands):
A total of $3.0 million of the unrecognized tax benefits would affect the Company's effective tax rate. The Company currently has a full valuation allowance against its U.S. net deferred tax assets which would impact the timing of the effective tax rate benefit should any of these uncertain tax positions be favorably settled in the future.
The Company does not expect the unrecognized tax benefits to change significantly over the next twelve months. The Company will recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of December 31, 2012, the Company has not accrued interest or penalties related to uncertain tax positions.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/presentationRef