OSIR » Topics » Income Taxes

This excerpt taken from the OSIR 10-Q filed May 11, 2009.

Income Taxes

 

During the fiscal quarter ended March 31, 2009, we recognized an income tax benefit to continuing operations of $0.7 million, and income tax expense of $2.1 million against the income from discontinuing operations.. We have not recognized any deferred tax assets or liabilities in our financial statements above these amounts since we cannot assure their future realization.  Because realization of deferred tax assets is dependent upon future earnings, a full valuation allowance has been recorded on the net deferred tax assets, which relate primarily to net operating loss and research and development carry-forwards.  In the event that we become profitable within the next several years, we have net deferred tax assets of approximately $102.5 million that may be utilized prior to us having to recognize any income tax expense or make payments to the taxing authorities.  However, utilization of our net operating loss and tax credit carry-forwards in any one year may be limited under Internal Revenue Code Sections 382 and 383. In addition, even if certain of our net deferred tax assets are not subject to limitations, we may be subject to the Federal alternative minimum tax in future years.

 

The tax benefit for the quarter ended March 31, 2009, reflects an effective tax rate for continuing operations of 8.6% compared to a U.S. statutory tax rate of 35%.  The effective tax rate reflects our estimated annual effective tax rate, which reflects our expectation that a portion of our income will be subject to the Federal alternative minimum tax in 2009.

 

These excerpts taken from the OSIR 10-K filed Mar 16, 2009.

Income Taxes

        We have not recognized any deferred tax assets or liabilities in our financial statements since we cannot assure their future realization. Because realization of deferred tax assets is dependent upon future earnings, a full valuation allowance has been recorded on the net deferred tax assets, which relate primarily to net operating loss and research and development carry-forwards. In the event that we become profitable within the next several years, we have net deferred tax assets (before a 100% valuation allowance) of approximately $105.3 million that may be utilized prior to us having to

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recognize any income tax expense or make payments to the taxing authorities. Utilization of our net operating loss carry-forwards in any one year may be limited under IRC Section 382, and we could be subject to the alternative minimum tax, thereby potentially diminishing the value to us of this tax asset.

Income Taxes



        We have not recognized any deferred tax assets or liabilities in our financial statements since we cannot assure their future
realization. Because realization of deferred tax assets is dependent upon future earnings, a full valuation allowance has been recorded on the net deferred tax assets, which relate primarily to net
operating loss and research and development carry-forwards. In the event that we become profitable within the next several years, we have net deferred tax assets (before a 100% valuation allowance) of
approximately $105.3 million that may be utilized prior to us having to



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recognize
any income tax expense or make payments to the taxing authorities. Utilization of our net operating loss carry-forwards in any one year may be limited under IRC Section 382, and we
could be subject to the alternative minimum tax, thereby potentially diminishing the value to us of this tax asset.



Income Taxes

        Deferred tax liabilities and assets are recognized for the estimated future tax consequences of temporary differences, income tax credits and net operating loss carry-forwards. Temporary differences are primarily the result of the differences between the tax bases of assets and liabilities and their financial reporting values. Deferred tax liabilities and assets are measured by applying the enacted statutory tax rates applicable to the future years in which deferred tax liabilities or assets are expected to be settled or realized. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense, if any, consists of the taxes payable for the current period and the change during the period in deferred tax assets and liabilities. For all periods presented, valuation allowances have been provided for the full amount of net deferred tax assets and no income tax expense or benefit has been recognized.

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OSIRIS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

(amounts in thousands, except for share and per share data)

1. Description of Business and Significant Accounting Policies (Continued)

Income Taxes



        Deferred tax liabilities and assets are recognized for the estimated future tax consequences of temporary differences, income tax
credits and net operating loss carry-forwards. Temporary differences are primarily the result of the differences between the tax bases of assets and liabilities and their financial reporting values.
Deferred tax liabilities and assets are measured by applying the enacted statutory tax rates applicable to the future years in which deferred tax liabilities or assets are expected to be settled or
realized. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense, if any, consists of the taxes payable for the
current period and the change during the period in deferred tax assets and liabilities. For all periods presented, valuation allowances have been provided for the full amount of net deferred tax
assets and no income tax expense or benefit has been recognized.



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OSIRIS THERAPEUTICS, INC.



NOTES TO FINANCIAL STATEMENTS (Continued)



YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006



(amounts in thousands, except for share and per share data)



1. Description of Business and Significant Accounting Policies (Continued)



11. Income Taxes

        The components of the Company's net deferred tax assets at December 31 are as follows:

 
  2008   2007  

Deferred Tax Assets:

             
 

Net operating loss carry-forwards

  $ 95,128   $ 85,016  
 

Research and experimentation credit carry-forwards

    10,090     7,167  
 

Property and equipment

    40     1,432  
           

    105,258     93,615  

Valuation allowance

    (105,258 )   (93,615 )
           

Net deferred tax assets

  $   $  
           

        Our deferred tax assets have been fully reserved in both 2008 and 2007 since their ultimate future realization cannot be assured. The valuation allowance increased by $11.6 million for the year ended December 31, 2008. We presently have available for federal income tax purposes, approximately $241.0 million of net operating loss carry-forwards and $10.0 million of research and experimentation credit carry-forwards, which expire beginning in 2009 through 2028. However, as a result of changes in our ownership since inception, the amount of these carry-forwards available to offset future taxable income and income taxes could be subject to annual limitations under IRC Section 382. We may be subject to the alternative minimum tax regardless of our net operating loss carry-forwards.

11. Income Taxes




        The components of the Company's net deferred tax assets at December 31 are as follows:


























































































































 
 2008  2007  

Deferred Tax Assets:

       
 

Net operating loss carry-forwards

 $95,128 $85,016 
 

Research and experimentation credit carry-forwards

  10,090  7,167 
 

Property and equipment

  40  1,432 
      

  105,258  93,615 

Valuation allowance

  (105,258) (93,615)
      

Net deferred tax assets

 $ $ 
      




        Our
deferred tax assets have been fully reserved in both 2008 and 2007 since their ultimate future realization cannot be assured. The valuation allowance increased by
$11.6 million for the year ended December 31, 2008. We presently have available for federal income tax purposes, approximately $241.0 million of net operating loss carry-forwards
and $10.0 million of research and experimentation credit carry-forwards, which expire beginning in 2009 through 2028. However, as a result of changes in our ownership since inception, the
amount of these carry-forwards available to offset future taxable income and income taxes could be subject to annual limitations under IRC Section 382. We may be subject to the alternative
minimum tax regardless of our net operating loss carry-forwards.



This excerpt taken from the OSIR 10-Q filed Nov 10, 2008.

Income Taxes

 

We have not recognized any deferred tax assets or liabilities in our financial statements since we cannot assure their future realization. Because realization of deferred tax assets is dependent upon future earnings, a full valuation allowance has been recorded on the net deferred tax assets, which relate primarily to net operating loss and research and development carry-forwards. In the event that we become profitable within the next several years, we have net deferred tax assets of approximately $80.0 million that may be utilized prior to us having to recognize any income tax expense or make payments to the taxing authorities.  Utilization of our net operating loss carry-forwards in any one year may be limited under Internal Revenue Code Section 382, and we could be subject to the Federal alternative minimum tax.

 

This excerpt taken from the OSIR 10-Q filed Aug 11, 2008.

Income Taxes

 

We have not recognized any deferred tax assets or liabilities in our financial statements since we cannot assure their future realization. Because realization of deferred tax assets is dependent upon future earnings, a full valuation allowance has been recorded on the net deferred tax assets, which relate primarily to net operating loss and research and development carry-forwards. In the event that we become profitable within the next several years, we have net deferred tax assets of approximately $80 million that may be utilized prior to us having to recognize any income tax expense or make payments to the taxing authorities.  Utilization of our net operating loss carry-forwards in any one year may be limited under Internal Revenue Code Section 382, and we could be subject to the alternative minimum tax.

 

15



This excerpt taken from the OSIR 10-Q filed May 12, 2008.

Income Taxes

 

We have not recognized any deferred tax assets or liabilities in our financial statements since we cannot assure their future realization. Because realization of deferred tax assets is dependent upon future earnings, a full valuation allowance has been recorded on the net deferred tax assets, which relate primarily to net operating loss and research and development carry-forwards. In the event that we become profitable within the next several years, we have net deferred tax assets of approximately $75 million that may be utilized prior to us having to recognize any income tax expense or make payments to the taxing authorities. Utilization of our net operating loss carry-forwards in any one year may be limited under Internal Revenue Code Section 382, and we could be subject to the alternative minimum tax.

 

12



 

These excerpts taken from the OSIR 10-K filed Mar 17, 2008.

9. Income Taxes

        The components of the Company's net deferred tax assets at December 31 are as follows:

 
  2007
  2006
 
Deferred Tax Assets:              
  Net operating loss carry-forwards   $ 85,016   $ 63,157  
  Research and experimentation credit carry-forwards     7,167     5,142  
  Property and equipment     1,432     1,546  
  Other         51  
   
 
 
      93,615     69,896  
Valuation allowance     (93,615 )   (69,896 )
   
 
 
Net deferred tax assets   $   $  
   
 
 

        Our deferred tax assets have been fully reserved in both 2007 and 2006 since their ultimate future realization cannot be assured. The valuation allowance increased by $23.7 million for the year ended December 31, 2007. We presently have available for federal income tax purposes, approximately $215 million of net operating loss carry-forwards and $7.1 million of research and experimentation credit carry-forwards, which expire beginning in 2009 through 2027. However, as a result of changes in our ownership since inception, the amount of these carry-forwards available to offset future taxable income and income taxes could be subject to annual limitations under IRC Section 382.

9. Income Taxes



        The components of the Company's net deferred tax assets at December 31 are as follows:

























































































































 
 2007
 2006
 
Deferred Tax Assets:       
 Net operating loss carry-forwards $85,016 $63,157 
 Research and experimentation credit carry-forwards  7,167  5,142 
 Property and equipment  1,432  1,546 
 Other    51 
  
 
 
   93,615  69,896 
Valuation allowance  (93,615) (69,896)
  
 
 
Net deferred tax assets $ $ 
  
 
 




        Our
deferred tax assets have been fully reserved in both 2007 and 2006 since their ultimate future realization cannot be assured. The valuation allowance increased by
$23.7 million for the year ended December 31, 2007. We presently have available for federal income tax purposes, approximately $215 million of net operating loss carry-forwards
and $7.1 million of research and experimentation credit carry-forwards, which expire beginning in 2009 through 2027. However, as a result of changes in our ownership since inception, the amount
of these carry-forwards available to offset future taxable income and income taxes could be subject to annual limitations under IRC Section 382.



This excerpt taken from the OSIR 10-Q filed Nov 13, 2007.

Income Taxes

 

We have not recognized any deferred tax assets or liabilities in our financial statements since we cannot assure their future realization. Because realization of deferred tax assets is dependent upon future earnings, a full valuation allowance has been recorded on the net deferred tax assets, which relate primarily to net operating loss and research and development carry-forwards. In the event that we become profitable within the next several years, we have net deferred tax assets of approximately $75 million that may be utilized prior to us having to recognize any income tax expense or make payments to the taxing authorities. Utilization of our net operating loss carry-forwards in any one year may be limited under Internal Revenue Code Section 382, and we could be subject to the alternative minimum tax.

 

This excerpt taken from the OSIR 10-Q filed Aug 10, 2007.

Income Taxes

We have not recognized any deferred tax assets or liabilities in our financial statements since we cannot assure their future realization. Because realization of deferred tax assets is dependent upon future earnings, a full valuation allowance has been recorded on the net deferred tax assets, which relate primarily to net operating loss and research and development carry-forwards. In the event that we become profitable within the next several years, we have net deferred tax assets of approximately $75 million that may be utilized prior to us having to recognize any income tax expense or make payments to the taxing authorities. Utilization of our net operating loss carry-forwards in any one year may be limited under IRC Section 382, and we could be subject to the alternative minimum tax.

This excerpt taken from the OSIR 10-Q filed May 14, 2007.

Income Taxes

We have not recognized any deferred tax assets or liabilities in our financial statements since we cannot assure their future realization. Because realization of deferred tax assets is dependent upon future earnings, a full valuation allowance has been recorded on the net deferred tax assets, which relate primarily to net operating loss and research and development carry-forwards. In the event that we become profitable within the next several years, we have net deferred tax assets of approximately $70 million that may be utilized prior to us having to recognize any income tax expense or make payments to the taxing authorities. Utilization of our net operating loss carry-forwards in any one year may be limited under IRC Section 382, and we could be subject to the alternative minimum tax.

This excerpt taken from the OSIR 10-K filed Mar 26, 2007.

9.   Income Taxes

The components of the Company’s net deferred tax assets at December 31 are as follows:

 

 

2006

 

2005

 

Deferred Tax Assets:

 

 

 

 

 

Net operating loss carry-forwards

 

$

63,157

 

$

50,818

 

Research and experimentation credit carry-forwards

 

5,142

 

4,803

 

Property and equipment

 

1,546

 

1,662

 

Other

 

51

 

51

 

 

 

69,896

 

57,334

 

Valuation allowance

 

(69,896

)

(57,334

)

Net deferred tax assets

 

$

 

$

 

 

82




Our deferred tax assets have been fully reserved in both 2006 and 2005 since their ultimate future realization cannot be assured. The valuation allowance increased by $12.6 million for the year ended December 31, 2006. We presently have available for federal income tax purposes, approximately $164 million of net operating loss carry-forwards and $5.1 million of research and experimentation credit carry-forwards, which expire beginning in 2009 through 2026. However, as a result of changes in our ownership since inception, the amount of these carry-forwards available to offset future taxable income and income taxes could be subject to annual limitations under IRC Section 382.

This excerpt taken from the OSIR 10-Q filed Nov 13, 2006.

Income Taxes

We have not recognized any deferred tax assets or liabilities in our financial statements since we cannot assure their future realization. Because realization of deferred tax assets is dependent upon future earnings, a full valuation allowance has been recorded on the net deferred tax assets, which relate primarily to net operating loss carryforwards. In the event that we become profitable within the next several years, we have net deferred tax assets of approximately $60 million that may be utilized prior to us having to recognize any income tax expense or make payments to the taxing authorities. Utilization of our net operating loss carryforwards in any one year may be limited however, and we could be subject to the alternative minimum tax.

14




This excerpt taken from the OSIR 10-Q filed Sep 15, 2006.

Income Taxes

We have not recognized any deferred tax assets or liabilities in our financial statements since we cannot assure their future realization. Because realization of deferred tax assets is dependent upon future earnings, a full valuation allowance has been recorded on the net deferred tax assets, which relate primarily to net operating loss carryforwards. In the event that we become profitable within the next several years, we have net deferred tax assets of approximately $60 million that may be utilized prior to us having to recognize any income tax expense or make payments to the taxing authorities. Utilization of our net operating loss carryforwards in any one year may be limited however, and we could be subject to the alternative minimum tax.

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