XML 37 R23.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | Note 15. Income Taxes On December 22, 2017, new tax legislation, Tax Cuts and Jobs Act (the “Tax Act”), was signed into law which significantly changes the Internal Revenue Code of 1986, as amended. The Tax Act, among other things, contains significant changes to corporate taxation including a change in the statutory tax rate on income to 21% and a mandatory deemed repatriation of previously unremitted foreign earnings. The Tax Act changes have been applied to reasonably estimate adjustments which are included in the below. These provisional amounts are based on the available regulatory guidance and the Company’s internal estimates as available at issuance of financial statements. The Company is continuing its analysis of both regulatory guidance and its internal information and any changes to the provisional estimates will be recorded as needed. U.S and foreign components of consolidated loss before income taxes for the years ended December 31, 2017, 2016 and 2015, was as follows (in thousands):
|  | 2017 |  |  | 2016 |  |  | 2015 |
Loss before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | (57,925 | ) |  | $ | (63,246 | ) |  | $ | (59,897 | )
Foreign |  |  | 1,227 |  |  |  | 515 |  |  |  | 358 |
Loss before income taxes |  | $ | (56,698 | ) |  | $ | (62,731 | ) |  | $ | (59,539 | )
The provision for income taxes for the years ended December 31, 2017, 2016 and 2015, was as follows (in thousands):
|  | 2017 |  |  | 2016 |  |  | 2015 |
Provision for income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Foreign |  | $ | 181 |  |  | $ | 147 |  |  | $ | 147 |
Federal |  |  | — |  |  |  | — |  |  |  | — |
State |  |  | — |  |  |  | — |  |  |  | — |
Total current |  |  | 181 |  |  |  | 147 |  |  |  | 147 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Foreign |  |  | — |  |  |  | — |  |  |  | — |
Federal |  |  | 3,659 |  |  |  | 28 |  |  |  | (3,750 | )
State |  |  | 47 |  |  |  | — |  |  |  | (68 | )
Total deferred |  |  | 3,706 |  |  |  | 28 |  |  |  | (3,818 | )
Provision (benefit) for income taxes |  | $ | 3,887 |  |  | $ | 175 |  |  | $ | (3,671 | )
The difference between the provision for income taxes and the amount computed by applying the federal statutory income tax rate to loss before taxes for the years ended December 31, 2017, 2016 and 2015, was as follows (in thousands):
|  | 2017 |  |  | 2016 |  |  | 2015 |
Federal statutory tax |  | $ | (19,277 | ) |  | $ | (21,329 | ) |  | $ | (20,243 | )
Tax Act revaluation of deferred taxes |  |  | 81,923 |  |  |  | — |  |  |  | — |
Tax Act deemed income inclusion |  |  | 1,083 |  |  |  | — |  |  |  | — |
Federal research credits |  |  | (1,000 | ) |  |  | (809 | ) |  |  | (838 | )
Warrants |  |  | — |  |  |  | — |  |  |  | (3,565 | )
Expiration of federal loss carryovers |  |  | — |  |  |  | — |  |  |  | 3,337 |
Expiration of California loss carryovers |  |  | 1,475 |  |  |  | — |  |  |  | — |
Change in valuation allowance |  |  | (59,462 | ) |  |  | 3,940 |  |  |  | 11,754 |
Non-deductible stock based compensation |  |  | 1,382 |  |  |  | 484 |  |  |  | 449 |
Change in state apportionment |  |  | — |  |  |  | — |  |  |  | 4,085 |
Revision to prior year items |  |  | — |  |  |  | 17,200 |  |  |  | — |
Other |  |  | (2,237 | ) |  |  | 689 |  |  |  | 1,350 |
Provision (benefit) for income taxes |  | $ | 3,887 |  |  | $ | 175 |  |  | $ | (3,671 | )
On December 31, 2015, the California Supreme Court issued a decision disallowing the use of an income apportionment method pursuant to the Multistate Tax Compact. On October 10, 2016, the U.S Supreme Court decided not to hear an appeal of this decision. Previously the Company had relied on lower court decisions allowing the use of this apportionment method to file its 2013 and 2014 tax returns and to determine its deferred tax balances. Based on the California Supreme Court decision, the Company adjusted the apportionment for its deferred tax balances and the respective valuation allowance as of December 31, 2015. During 2017 the Company reviewed its cumulative research tax credits and tax losses. As part of this review, revisions were made to the amounts as originally estimated which are reflected in the deferred tax balances and the respective valuation allowance as of December 31, 2017. The Tax Act resulted in a significant revaluation in the Company’s deferred tax balances as of the date of December 22, 2017, enactment due to the change in the statutory rate. In addition, all of the previously unremitted earnings of Cerus Europe B.V. were deemed to be distributed as of December 31, 2017, which resulted in a one-time deemed income inclusion. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes at the enacted rates. The significant components of the Company’s deferred tax assets and liabilities at December 31, 2017 and 2016, were as follows (in thousands):
|  | December 31, |
|  | 2017 |  |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 117,028 |  |  | $ | 176,490 |
Research and development credit carryforwards |  |  | 25,061 |  |  |  | 22,128 |
Capitalized research and development |  |  | 17,195 |  |  |  | 22,575 |
Deferred compensation |  |  | 7,011 |  |  |  | 8,242 |
Other |  |  | 3,116 |  |  |  | 3,184 |
Total deferred tax assets |  |  | 169,411 |  |  |  | 232,619 |
Valuation allowance |  |  | (169,332 | ) |  |  | (228,794 | )
Net deferred tax assets |  | $ | 79 |  |  | $ | 3,825 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Unrealized gain on investments |  | $ | — |  |  | $ | 3,825 |
Amortization of goodwill |  |  | 111 |  |  |  | 150 |
Total deferred tax liabilities |  | $ | 111 |  |  | $ | 3,975 |
The valuation allowance decreased by $59.5 million for the year ended December 31, 2017, compared to the increase of $3.9 million and $11.8 million for the years ended December 31, 2016 and 2015, respectively. The Company believes that, based on a number of factors, the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred tax assets such that a valuation allowance has been recorded. These factors include the Company’s history of net losses since its inception, the need for regulatory approval of the Company’s products prior to commercialization and expected near-term future losses. The Company expects to maintain a valuation allowance until circumstances change. For the year ended December 31, 2017, the Company reported pretax net losses on its consolidated statement of operations and calculated taxable losses for both federal and state taxes. The difference between reported net loss and taxable loss are due to differences between book accounting and the respective tax laws. The Company's tax losses and credits are subject to varying carryforward periods. The gross amounts and dates of expiration of the significant carryforwards are as follows:
|  |  |  |  |  | Expires |  |  | Expires |  |  | Expires |  |  | No |
|  | Total |  |  | 2018-2020 |  |  | 2021-2027 |  |  | 2028-2037 |  |  | Expiration |
Federal losses carryovers |  | $ | 531,303 |  |  | $ | 74,073 |  |  | $ | 145,248 |  |  | $ | 311,982 |  |  | $ | — |
California loss carryovers |  |  | 73,860 |  |  |  | 19,243 |  |  |  | — |  |  |  | 54,617 |  |  |  | — |
Federal research credits |  |  | 17,642 |  |  |  | 3,262 |  |  |  | 9,866 |  |  |  | 4,514 |  |  |  | — |
California research credits |  |  | 9,391 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 9,391 |
Federal foreign tax credits |  |  | 610 |  |  |  | — |  |  |  | 610 |  |  |  | — |  |  |  | — |
The Company’s ability to utilize net operating loss and research and development credit carryforwards is limited by (a) its ability to generate future taxable income, (b) varying apportionment and allocation rules including new provisions as part of the Tax Act, and (c) limitations pursuant to the ownership change rules in accordance with Section 382 of the Internal Revenue Code of 1986 and with Section 383 of the Internal Revenue Code of 1986, as well as similar state provisions. The Company’s unrecognized tax benefits relate to federal and California research tax credits. These tax credits have not been utilized on any tax return and currently have no impact on the Company’s tax expense due to the Company’s operating losses and the related valuation allowances. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):
|  | December 31, |  |  | December 31, |
|  | 2017 |  |  | 2016 |
Unrecognized tax benefits at beginning of period |  | $ | 10,836 |  |  | $ | — |
Increases related to prior year tax positions |  |  | 19 |  |  |  | 10,691 |
Increases related to current year tax positions |  |  | 207 |  |  |  | 145 |
Unrecognized tax benefits at end of period |  | $ | 11,062 |  |  | $ | 10,836 |
The Company will recognize accrued interest and penalties related to unrecognized tax benefits in its income tax expense. To date, the Company has not recognized any interest and penalties in its consolidated statements of operations, nor has it accrued for or made payments for interest and penalties. The Company’s federal tax returns for years 1998 through 2016 and California tax returns for years through 2016 remain subject to examination by the taxing jurisdictions due to unutilized net operating losses and research credits. The Netherlands tax returns of the Company’s Europe B.V. subsidiary for the years 2014 through 2016 are still subject to examination. There was no income tax audit activity in 2016 nor has the Company been notified by any tax agency of any planned audits.

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://www.xbrl.org/2003/role/presentationRef -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