XML 31 R16.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | (10) Income Taxes Interest and penalties related to any uncertain tax positions have historically been insignificant. The Company recognizes interest and penalties related to uncertain tax positions within the provision for income taxes. The total amount of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized is nil as of both December 31, 2018 and 2017. The following is a reconciliation of the total amounts of unrecognized tax benefits for the years ended December 31, 2018, 2017 and 2016:
In thousands |  |  | 2018 |  |  | 2017 |  |  | 2016 |
Beginning uncertain tax benefits |  | $ | 1,734 |  |  | $ | 1,633 |  |  | $ | 1,550 |
Prior year—increases |  |  | 296 |  |  |  | — |  |  |  | — |
Prior year—decreases |  |  | (762 | ) |  |  | (20 | ) |  |  | — |
Current year—increases |  |  | 5,547 |  |  |  | 121 |  |  |  | 83 |
Ending uncertain tax benefits |  | $ | 6,815 |  |  | $ | 1,734 |  |  | $ | 1,633 |
The Company files income tax returns in the United States, Ireland and United Kingdom, or UK. The Company remains subject to tax examinations in the following jurisdictions as of December 31, 2018:
Jurisdiction |  |  | Tax Years
United States—Federal |  | 2015-2018
United States—State |  | 2012-2018
Ireland |  | 2014-2018
United Kingdom |  | 2017-2018
The Company does not expect any gross liabilities to expire in 2019 based on statutory lapses or audits. The components of loss from operations before taxes were as follows for the years ended December 31, 2018, 2017 and 2016:
In thousands |  | 2018 |  |  | 2017 |  |  | 2016 |
United States |  | $ | (13,583 | ) |  | $ | (2,075 | ) |  | $ | (8,115 | )
Ireland and United Kingdom |  |  | (102,766 | ) |  |  | (52,743 | ) |  |  | (68,266 | )
|  |  | $ | (116,349 | ) |  | $ | (54,818 | ) |  | $ | (76,381 | )
The provision for income taxes shown in the accompanying consolidated statements of operations consists of the following for fiscal 2018, 2017 and 2016:
In thousands |  | 2018 |  |  | 2017 |  |  | 2016 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
United States—Federal |  | $ | 4 |  |  | $ | 1,769 |  |  | $ | 1,033 |
United States—State |  |  | 92 |  |  |  | 196 |  |  |  | 138 |
Total current |  | $ | 96 |  |  | $ | 1,965 |  |  | $ | 1,171 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
United States—Federal |  |  | (1,968 | ) |  |  | 5,760 |  |  |  | (4,001 | )
United States—State |  |  | (1,325 | ) |  |  | (487 | ) |  |  | (334 | )
Ireland and United Kingdom |  |  | (5,435 | ) |  |  | (16,306 | ) |  |  | (143 | )
Change in valuation allowance |  |  | 8,728 |  |  |  | 22,115 |  |  |  | 13,276 |
Total deferred |  | $ | — |  |  | $ | 11,082 |  |  | $ | 8,798 |
Provision for income taxes |  | $ | 96 |  |  | $ | 13,047 |  |  | $ | 9,969 |
The provision for income taxes differs from the amount computed by applying the statutory income tax rate to income before taxes due to the following for fiscal 2018, 2017 and 2016:
In thousands |  | 2018 |  |  | 2017 |  |  | 2016 |
Benefits from taxes at statutory rate | $ | (29,087 | ) |  | $ | (13,698 | ) |  | $ | (19,039 | )
Rate differential |  | 9,796 |  |  |  | 3,071 |  |  |  | 4,667 |
Change in valuation reserves |  | 8,728 |  |  |  | 22,115 |  |  |  | 13,276 |
Derivative liabilities |  | 337 |  |  |  | — |  |  |  | (668 | )
Nondeductible employee compensation |  | 3,058 |  |  |  | 1,668 |  |  |  | 1,164 |
Stock option/RSU windfall |  | (7,684 | ) |  |  | (1,182 | ) |  |  | — |
Research and development credits |  | (1,438 | ) |  |  | (1,177 | ) |  |  | (1,689 | )
Tax return to provision adjustments |  | 6,736 |  |  |  | 5,788 |  |  |  | 4,524 |
U.S. rate change—tax reform |  | — |  |  |  | 7,398 |  |  |  | — |
Cumulative translation adjustment |  | 5,711 |  |  |  | (12,554 | ) |  |  | 7,385 |
Permanent and other |  | (404 | ) |  |  | 1,635 |  |  |  | (1,573 | )
Non-deductible interest expense |  | 267 |  |  |  | (17 | ) |  |  | 1,922 |
Tax reserves |  | 4,956 |  |  |  | — |  |  |  | — |
Long-term debt from royalty-bearing instrument |  | (880 | ) |  |  | — |  |  |  | — |
Provision for income taxes | $ | 96 |  |  | $ | 13,047 |  |  | $ | 9,969 |
The Company is subject to a corporate tax rate in Ireland of 25% for non-trading activities and 12.5% for trading activities. For the years ended December 31, 2018, 2017, and 2016, the Company applied the statutory corporate tax rate of 25% for Amarin Corporation plc, reflecting the non-trading tax rate in Ireland. However, for Amarin Pharmaceuticals Ireland Limited, a wholly-owned subsidiary of Amarin Corporation plc, the Company applied the 12.5% Irish trading tax rate. In the table above, the Company used Amarin Corporation plc’s 25% tax rate as the starting point for the reconciliation since it is the parent entity of the business. On December 22, 2017, the U.S. enacted the Act that instituted fundamental changes to the taxation of multinational corporations. The Act includes changes to the taxation of foreign earnings by implementing a dividend exemption system, expansion of the current anti-deferral rules, a minimum tax on low-taxed foreign earnings and new measures to deter base erosion. The Act also includes a permanent reduction in the corporate tax rate to 21%, repeal of the corporate alternative minimum tax, expensing of capital investment, and limitation of the deduction of interest expense. Furthermore, as part of the transition to the new tax system, a one-time transition tax is imposed on a U.S. shareholder's historical undistributed earnings of foreign affiliates. Although the Act was generally effective January 1, 2018, U.S. GAAP required recognition of the tax effects of new legislation during the reporting period that included the enactment date, which was December 22, 2017. As a result of the financial reporting implications of the Act, the SEC provided guidance that allowed the Company to record provisional amounts for those impacts, with the requirement that the accounting be completed in a period not to exceed one year from the date of enactment. As of December 31, 2018, the Company has finalized the amounts related to tax reform to account for the impact of the Act. No adjustments to the financial statements were recorded in connection with the finalization of the accounting. The primary impact of the Act on the Company related to the re-measurement of deferred tax assets and liabilities resulting from the change in the corporate tax rate from 34% to 21%. At the date of enactment, the Company had net deferred tax assets for the excess of the net tax value over the book basis of its U.S. assets and liabilities which will generate future tax deductions in excess of book expense. As a result of the Act, future tax deductions will result in a decreased reduction in tax expense. Consequently, the Company reduced the amount of the U.S. subsidiary’s net deferred tax assets as of the date of enactment and recorded a non-cash charge of $2.4 million in the provision for income taxes for the year ended December 31, 2017 due to the decrease in the corporate tax rate. In addition, based on the Company’s evaluation of available evidence, the Company recognized non-cash tax expense during the year ended December 31, 2017 of $8.7 million related to the recording of additional valuation allowance to reduce the deferred tax assets on the balance sheet to zero as the Company concluded that it is not more likely than not that certain of the deferred tax benefits resulting from deferred tax assets generated from the U.S. subsidiary operations will be realized. In April 2016, the Company adopted ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Share-Based Payment Accounting which changes the accounting for certain aspects of share-based payments to employees. One aspect of the standard requires that excess tax benefits and deficiencies that arise upon vesting or exercise of share-based payments be recognized as an income tax benefit and expense in the income statement. Previously, such amounts were recognized as an increase and decrease in additional paid-in capital. This aspect of the standard was adopted prospectively, and accordingly the provisions for income taxes for the years ended December 31, 2018, 2017 and 2016 includes $7.7 million of excess tax benefits, $1.3 million of excess tax benefits and $0.4 million of excess tax deficiencies, respectively, arising from share-based payments during the period of adoption. Additionally, the new standard requires that historical excess tax benefits that were not previously recognized because the related tax deduction had not reduced current taxes should be recognized on a modified retrospective basis as a cumulative-effect adjustment to retained earnings as of the beginning of the annual period of adoption. Consequently, the Company recognized deferred tax assets of approximately $1.6 million relating to excess tax benefits on stock-based compensation during the year of adoption, with a corresponding cumulative-effect adjustment to accumulated deficit. The income tax effect of each type of temporary difference comprising the net deferred tax asset as of December 31, 2018 and 2017 is as follows:
In thousands |  | December 31, 2018 |  |  | December 31, 2017 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating losses |  | $ | 119,355 |  |  | $ | 110,715 |
Stock-based compensation |  |  | 8,113 |  |  |  | 12,446 |
Tax credits |  |  | 7,816 |  |  |  | 6,378 |
Other reserves and accrued liabilities |  |  | 6,344 |  |  |  | 3,587 |
Gross deferred tax assets |  |  | 141,628 |  |  |  | 133,126 |
Less: valuation allowance |  |  | (140,117 | ) |  |  | (131,389 | )
Total deferred tax assets |  |  | 1,511 |  |  |  | 1,737 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | (1,011 | ) |  |  | (1,145 | )
Other liabilities |  |  |  | (500 | ) |  |  | (592 | )
Total deferred tax liabilities |  |  | (1,511 | ) |  |  | (1,737 | )
Net deferred tax assets |  | $ | — |  |  | $ | — |
The Company assesses whether it is more-likely-than-not that the Company will realize its deferred tax assets. The Company determined that it was more-likely-than-not that the Irish, U.S., UK, and Israeli net operating losses and the related deferred tax assets would not be realized in future periods and a full valuation allowance has been provided for all periods. The following table reflects the activity in the valuation allowance for the years ended December 31, 2018 and 2017:
In thousands |  | 2018 |  |  | 2017 |
Beginning valuation allowance | $ | 131,389 |  |  | $ | 109,274 |
Increase as reflected in income tax expense |  | 13,609 |  |  |  | 11,466 |
Cumulative translation adjustment |  | (4,881 | ) |  |  | 10,649 |
Ending valuation allowance | $ | 140,117 |  |  | $ | 131,389 |
During 2018, the Company recorded adjustments to its deferred tax accounts related to the impact of foreign exchange rate changes and to reconcile the financial statement accounts to the amounts expected to result in future income and deductions under local law, primarily as it relates to Irish net operating losses and deferred taxes for stock compensation. These adjustments were fully offset with valuation allowances based on the Company’s position with respect to the realizability of its recorded deferred tax assets in non-U.S. entities. The Company has combined U.S., Irish, UK, and Israeli net operating loss carryforwards of $788.7 million, which do not expire. The total net operating loss carryforwards increased by approximately $78.3 million from the prior year primarily as a result of current year losses generated by the Company’s U.S. and Irish subsidiaries, the impact of foreign exchange rate changes, and adjustments to reconcile the financial statement accounts to the amounts reported on the filed 2017 foreign tax returns. In addition, the Company has U.S. Federal tax credit carryforwards of $7.1 million and state tax credit carryforwards of $2.1 million. These amounts exclude the impact of any unrecognized tax benefits and valuation allowances. These carryforwards, which will expire between 2024 and 2038, may be used to offset future taxable income. As of December 31, 2018, earnings of $8.4 million have been retained indefinitely for reinvestment by foreign subsidiary or there is an expectation that any reinvestment can be recovered tax-free without significant cost, and the entity expects to ultimately use that means of recovery for domestic subsidiary companies; therefore, no provision has been made for income taxes that would be payable upon the distribution of such earnings and it would not be practicable to determine the amount of the related unrecognized deferred income tax liability. The Company's and its subsidiaries' income tax returns are periodically examined by various taxing authorities. The Company is currently under audit by the New Jersey Department of Treasury for the years 2012 to 2015. Although the outcome of tax audits is always uncertain and could result in significant cash tax payments, the Company does not believe the outcome of these audits will have a material adverse effect on the Company's consolidated financial position or results of operations.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration