Description of Business and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2013 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Description of Business and Significant Accounting Policies | ' |
Description of Business and Significant Accounting Policies |
Description of Business |
LipoScience, Inc. (“LipoScience” or the “Company”) was incorporated under the laws of North Carolina in June 1994 under the name LipoMed, Inc. and reincorporated under the laws of Delaware in June 2000. In January 2002, the Company changed its corporate name to LipoScience, Inc. The Company is an in vitro diagnostic company pioneering a new field of personalized diagnostics based on nuclear magnetic resonance (“NMR”) technology. The Company's first diagnostic test, the NMR LipoProfile test, is cleared by the U.S. Food and Drug Administration (the "FDA"), and directly measures the number of low density lipoprotein, (“LDL”) particles in a blood sample and provides physicians and their patients with actionable information to personalize management of risk for heart disease. |
Basis of Presentation and Use of Estimates |
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include all adjustments necessary for the fair presentation of the Company's financial position, results of operations and cash flows for the periods presented. In preparing the financial statements, management must make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements and reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates and assumptions used. |
Unaudited Financial Statements |
The accompanying unaudited financial statements have been prepared in accordance with the rules and regulations for the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete annual financial statements. These financial statements should be read in conjunction with the audited financial statements and the accompanying notes for the year ended December 31, 2012 contained in the Company's Annual Report on Form 10-K filed with the SEC on March 27, 2013 (the "Form 10-K"). The unaudited interim financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) necessary to state fairly the Company's financial position as of September 30, 2013, the results of operations for the three and nine months ended September 30, 2013 and 2012, and cash flows for the nine months ended September 30, 2013 and 2012. The December 31, 2012 balance sheet included herein was derived from audited financial statements, but does not include all disclosures including notes required by GAAP for complete annual financial statements. The financial data and other information disclosed in these notes to the financial statements related to the three and nine months ended September 30, 2013 and 2012 are unaudited. Interim results are not necessarily indicative of results to be expected for the year ending December 31, 2013 or any other interim period or for any other future year. |
Reverse Stock Split |
On January 4, 2013, the Company's Board of Directors approved a 0.485-for-1 reverse stock split of the Company's outstanding common stock. The reverse stock split was effected on January 10, 2013, which resulted in an adjustment to the preferred stock conversion price to reflect a proportional decrease in the number of shares of common stock to be issued upon conversion. The accompanying financial statements and notes to financial statements give retroactive effect to the reverse stock split for all periods presented. |
Initial Public Offering |
On January 30, 2013, the Company closed its initial public offering ("IPO") pursuant to a registration statement that was declared effective on January 24, 2013. The Company sold 5,750,000 shares of its common stock in the IPO, at a price to the public of $9.00 per share, for aggregate gross proceeds of $51.8 million, which included 750,000 shares of its common stock that the underwriters purchased pursuant to an over-allotment option granted to the underwriters. As a result of the IPO, the Company raised a total of $44.4 million in net proceeds after deducting underwriting discounts and commissions of $3.4 million and offering costs of $4.0 million. Costs directly associated with the IPO were capitalized and recorded as deferred offering costs prior to the closing of the IPO. These costs were recorded as a reduction of the IPO proceeds received in arriving at the amount to be recorded in additional paid-in capital. Upon the closing of the IPO, 12,892,682 shares of the Company's outstanding preferred stock automatically converted into a total of 6,994,559 shares of its common stock, and the then-outstanding preferred stock warrant liability was reclassified to additional paid-in capital upon the conversion of warrants to purchase preferred stock into warrants to purchase common stock. |
Concurrently with the closing of the IPO, the Company paid $5.2 million to holders of its Series F redeemable convertible preferred stock in full satisfaction of accrued dividends on such shares immediately prior to their conversion to common stock. |
Customers and Payors |
The Company provides diagnostic tests to a broad range of customers. A majority of these tests are comprised of orders generated through clinical diagnostic laboratory customers and clinicians. The Company also receives requests from academic institutions as well as pharmaceutical companies. In most cases, the customer that orders the tests is not responsible for the payments for services. The Company considers a party that refers a test to it to be a “customer” and a party that reimburses the Company as a “payor.” Depending on the billing arrangement and applicable law, the payor may be (i) a clinical diagnostic laboratory, (ii) a third party responsible for providing health insurance coverage to patients, such as a health insurance plan or the traditional Medicare or Medicaid program, (iii) the physician or (iv) the patient or other party (such as academic institutions or pharmaceutical companies) who requested the test from the Company. |
Revenue Recognition |
The Company currently derives revenue from sales of its NMR LipoProfile test to clinical diagnostic laboratories and clinicians for use in patient care, from sales of ancillary tests for use in patient care requested in conjunction with the NMR LipoProfile test and from contract research arrangements. |
Revenues from diagnostic tests for patient care, which consist of sales of the NMR LipoProfile test performed at the Company's laboratory facility and at third party clinical diagnostic laboratory facilities (see “The Vantera System Placement Arrangements” below) and sales of ancillary tests, are recognized on the accrual basis when the following revenue recognition criteria are met: (1) persuasive evidence that an arrangement exists; (2) services have been rendered or at the time final results are reported; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Testing services provided for patient care are covered by clinical diagnostic laboratories through negotiated contracts with commercial insurance carriers, programs with commercial insurance carriers (including managed care organizations) and various governmental programs, primarily Medicare. |
Billings for diagnostic tests for patient care under governmental and physician-based programs are included in revenues net of contractual adjustments. These contractual adjustments represent the difference between the final settlement amount paid by the program and the estimated settlement amount based on either the list price for tests performed or the reimbursement rate set by commercial insurance carriers or governmental programs. Estimated contractual adjustments are updated either upon notification from payors as to changes in existing reimbursement rates, which are typically received prior to changes going into effect, or upon a material variance between the final settlement and the estimated contractual adjustment originally established when the revenues were recognized. To date, the Company's final settlement adjustments have not been material. |
Revenues from contract research arrangements are generally derived from studies conducted by academic institutions and pharmaceutical companies. The specific methodology for revenue recognition is determined on a case-by-case basis according to the facts and circumstances applicable to a given agreement. The Company's output, measured in terms of full-time equivalent level of effort or processing a set of diagnostic tests under a contractual protocol, typically triggers payment obligations under these agreements. Revenues are recognized as costs are incurred or diagnostic tests are processed. Contract research costs include all direct material and labor costs, equipment costs and fringe benefits. Advance payments received in excess of revenues recognized are classified as deferred revenue until such time as the revenue recognition criteria have been met. |
Billing for diagnostic testing services for patient care is complex. In most cases, tests are performed in advance of payment and without certainty as to the outcome of the billing process, which may negatively affect revenues, cash flow and profitability. Payments are received from a variety of payors, including clinical diagnostic laboratories, commercial insurance carriers (including managed care organizations), governmental payors (primarily Medicare) and individual patients. Each payor typically has different billing requirements, and the billing requirements of many payors have become increasingly stringent. |
The Company generally assumes the financial risk related to collection, including the potential uncollectibility of accounts and the other complex factors identified above. For sales of its NMR LipoProfile test to clinical diagnostic laboratories, the clinical diagnostic laboratories are responsible for obtaining reimbursement from third-party payors or directly from patients. Delays in collection and uncollectible bills may negatively affect the Company's revenues, cash flow and profitability. |
The Vantera System Placement Arrangements |
The Company's automated clinical analyzer, the Vantera system, was cleared by the FDA in August 2012 and became commercially available in December 2012. The Company started placing the Vantera system on-site with certain qualified national and regional clinical diagnostic laboratories as well as leading medical centers and hospital outreach laboratories during the second quarter of 2013. |
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The Company's Vantera system placement arrangements (or “placement arrangements”) are generally negotiated and accounted for as operating leases. Arrangement consideration is determined based on the test volume and the negotiated price-per-reportable NMR LipoProfile test result. The placement arrangements typically include lease and non-lease deliverables. Lease deliverables include the right to use the Vantera system and related maintenance and support, while non-lease deliverables consist of the NMR LipoProfile test and consumables. Lease deliverables are accounted for in accordance with specific leasing guidance while non-lease deliverables are accounted for in accordance with the multiple-element arrangement guidance. |
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The Company evaluates each non-lease deliverable to determine whether it represents a separate unit of accounting. A deliverable is considered a separate unit of accounting when the delivered item has stand-alone value and delivery of the undelivered element is probable and within the Company's control. The Company has determined that both the NMR LipoProfile test and consumables have separate units of accounting. The NMR LipoProfile test is the Company's most significant deliverable under these placement arrangements. |
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The Company allocates revenue to each deliverable at the inception of the placement arrangement, based on its estimated stand-alone value in relation to the combined estimated stand-alone value of all deliverables, or the relative selling price method. Revenue allocated to each deliverable is then recognized when the basic revenue recognition criteria, as described above, is met for each deliverable. |
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The Company applies the following selling price hierarchy in determining the selling price for each deliverable: |
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• | Vendor-specific objective evidence (“VSOE”) if available-the price charged for a deliverable when it is sold separately and, in other instances, using the price established by management having the relevant authority. | | | | | | | | | | |
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• | Third-party evidence (“TPE”) if VSOE is not available-the price of the vendor's or any competitor's largely interchangeable products or services in standalone sales to similarly situated customers. | | | | | | | | | | |
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• | Estimated selling price (“ESP”) if neither VSOE or TPE is available-the price best estimated by the vendor and at which the vendor would transact if the deliverable would have been sold by the vendor regularly on a standalone basis. | | | | | | | | | | |
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The Company has determined that only the selling price of its NMR LipoProfile test is based on VSOE. The Company does not sell the license to use the Vantera system, the consumables or related maintenance and support separately on a regular basis and therefore it does not have the evidence to support VSOE for these deliverables. Due to the high degree of customization involved with these deliverables, the Company has determined that there is no comparable TPE for these deliverables. Since these deliverables have neither VSOE nor TPE, the allocation of revenue to them has been based on the Company's ESP. |
The Company's process for determining ESP for its deliverables considers all reasonably available information including both market data and conditions, as well as entity specific factors that may vary depending upon the facts and circumstances related to each deliverable. Key factors considered in developing ESP relating to deliverables include cost structures, established pricing and approval policies and customization of the product or service and industry pricing. The Company regularly reviews ESP and maintains internal controls over the establishment and updates of these estimates. |
Shipping and Handling |
The Company does not bill its customers for shipping and handling charges. All charges relating to inbound and outbound freight costs are incurred by the Company and recorded within cost of revenues. The Company incurred shipping and handling costs of $0.2 million and $0.4 million for the three months ended September 30, 2013 and 2012, respectively, and $1.0 million and $1.2 million for the nine months ended September 30, 2013 and 2012, respectively. |
Fair Value of Financial Instruments |
The Company measures certain financial assets and liabilities at fair value based on the price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. As of September 30, 2013 and December 31, 2012, the Company's financial instruments consisted principally of cash and cash equivalents, a revolving line of credit, long-term debt and preferred stock warrant liability. See Note 2, “Fair Value Measurement,” to the financial statements for further information on the fair value of the Company's financial instruments. |
Cash and Cash Equivalents |
The Company invests its available cash balances in cash, certificates of deposits and money market funds. The Company considers all highly liquid instruments purchased with original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents are stated at cost and the carrying amounts approximate fair value. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. Additionally, the Company has established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity. See Note 6 for a discussion of Restricted Cash. |
Accounts Receivable |
Accounts receivable are primarily amounts due from clinical diagnostic laboratories, commercial insurance companies (including managed care organizations), governmental programs (primarily Medicare), physicians, and individual patients. |
Accounts receivable are reported net of an allowance for uncollectible accounts and contractual allowance adjustments. The process of estimating the collection of accounts receivable involves significant assumptions and judgments. Specifically, the accounts receivable allowance is based on management's analysis of current and past due accounts, collection experience in relation to amounts billed, changes in reimbursement levels, known contract terms, channel mix, any specific customer collection issues that have been identified and other relevant information. The Company's provision for uncollectible accounts is recorded as bad debt expense and included in general and administrative expenses. Historically, the Company has not experienced significant credit loss related to its customers or payors. Although the Company believes amounts provided are adequate, the ultimate amounts of uncollectible accounts receivable could be in excess of the amounts provided. |
Inventories |
Inventories consist of materials and spare parts to service the Vantera system. Inventories are valued at the lower of cost or net realizable value. The cost of inventories is maintained using the average-cost method. |
Property and Equipment |
Property and equipment are stated at cost. Property and equipment financed under capital leases are initially recorded at the present value of minimum lease payments at the inception of the lease. Amortization of assets financed under capital leases is included with purchased property and equipment as part of depreciation and amortization. |
Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Property and equipment under capital leases and leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life of the asset. Depreciable lives range from three to seven years for laboratory equipment, customer-use assets, office equipment and furniture and fixtures and three years for software. |
Intangible Assets |
Intangible assets include patent costs, trademark costs and technology licenses that are capitalized and amortized over estimated useful lives (generally nine to twenty years) using the straight-line method. Patent costs are expensed if the patent is not granted. On an ongoing basis, the Company assesses the recoverability of its intangible assets by determining its ability to generate undiscounted future cash flows sufficient to recover the unamortized balances over the remaining useful lives. Intangible assets determined to be unrecoverable are expensed in the period in which the determination is made. |
Amortization expense on intangible assets was $6,000 and $4,000 for the three months ended September 30, 2013 and 2012, respectively, and $17,000 and $14,000 for the nine months ended September 30, 2013 and 2012, respectively. |
Impairment of Long-Lived Assets |
The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may be impaired and assesses their recoverability based upon anticipated future cash flows. If changes in circumstances lead the Company to believe that any of its long-lived assets may be impaired, the Company will (a) evaluate the extent to which the remaining book value of the asset is recoverable by comparing the future undiscounted cash flows estimated to be associated with the asset to the asset's carrying amount and (b) write-down the carrying amount to market value or discounted cash flow value to the extent necessary. |
Deferred Offering Costs |
Deferred offering costs represent legal, accounting and other direct costs related to the Company's efforts to raise capital through the IPO. Costs related to the Company's IPO activities were deferred until the completion of the IPO, at which time they were reclassified to additional paid-in capital as a reduction of the IPO proceeds. Upon closing of the IPO, the $3.2 million of deferred offering costs at December 31, 2012 were recorded as a reduction of the proceeds received. |
Redeemable Convertible Preferred Stock |
The Company had historically classified its redeemable convertible preferred stock, for which the Company did not control the redemption, outside of permanent equity. The Company had recorded redeemable convertible preferred stock at fair value upon issuance, net of any issuance costs or discounts, and the carrying value was increased by periodic accretion to its redemption value. These increases were effected through charges against additional paid-in capital. Upon closing of the IPO, all outstanding redeemable convertible preferred stock as well as convertible preferred stock was reclassified to additional paid-in capital. The notes to the Company's audited financial statements for the year ended December 31, 2012 included in its Annual Report on Form 10-K for that year, filed with the Securities and Exchange Commission on March 27, 2013, provide details regarding the various features of the redeemable convertible preferred stock. |
Preferred Stock Warrant Liability |
The Company had historically accounted for its freestanding warrants to purchase the Company's Series E and Series F Redeemable Convertible Preferred Stock as liabilities at fair value on the accompanying balance sheets. The warrants were subject to re-measurement at each balance sheet date, and the change in fair value, if any, was recognized as other income or expense. As a result of the IPO, all preferred stock warrant liability was reclassified to additional paid-in capital upon the conversion of warrants to purchase preferred stock into warrants to purchase common stock. |
Concentration of Credit Risk and Other Risks |
The Company derives its revenues from diagnostic testing services provided for patient care and contract research arrangements with institutional customers. The Company operates in one industry segment. Substantially all of the Company's historical revenues have been derived from the sale of the NMR LipoProfile test. |
The Company's principal financial instruments subject to potential concentration of credit risk are cash equivalents and trade accounts receivable, which are unsecured. Through September 30, 2013, no material losses have been incurred. |
Revenues from customers representing 10% or more of total revenues for the respective periods, are summarized as follows: |
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| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2013 | | 2012 | | 2013 | | 2012 |
Health Diagnostics Laboratory | 33 | % | | 34 | % | | 34 | % | | 32 | % |
LabCorp | 30 | | | 29 | | | 30 | | | 29 | |
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The Company’s accounts receivable due from these significant customers as a percentage of total accounts receivable was as follows as of the dates indicated: |
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| September 30, 2013 | | December 31, 2012 | | | | | | |
Health Diagnostics Laboratory | 37 | % | | * | | | | | | | |
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LabCorp | 19 | | | 39 | % | | | | | | |
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* Less than 10%. |
The Company depends on a limited number of suppliers, including single-source suppliers, of various critical components used in its Vantera system and existing NMR clinical analyzers. The loss of these suppliers, or their failure to supply the Company with the necessary components on a timely basis, could cause delays in the placement of Vantera system or the diagnostic testing process and adversely affect the Company. |
Research and Development Expenses |
Research and development expenses include all costs associated with the development of NMR technology products and are charged to expense as incurred. Research and development expenses include direct costs and an allocation of indirect costs, including amortization, depreciation, telephone, rent, supplies, insurance and repairs and maintenance. |
Financing Costs |
The Company capitalizes direct financing costs, which are included as other noncurrent assets on the Company's balance sheets. The Company accretes debt discounts, which are included as a direct deduction from the face amount of the financing. Debt financing costs and debt discounts are deferred and amortized to interest expense using the effective interest method over the life of the related debt. The related expense is included in interest expense in the Company's statements of comprehensive (loss) income. |
Income Taxes |
The Company accounts for income taxes under the asset and liability method, which requires, among other things, that deferred income taxes be provided for temporary differences between the tax basis of the Company's assets and liabilities and their financial statement reported amounts. In addition, deferred tax assets are recorded for the future benefit of utilizing net operating losses and research and development credit carryforwards. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. |
The Company has adopted the accounting guidance for uncertainties in income taxes, which proscribes a recognition threshold and measurement process for recording uncertain tax positions taken, or expected to be taken, in a tax return in the financial statements. Additionally, the guidance also proscribes a new treatment for the derecognition, classification, accounting in interim periods and disclosure requirements for uncertain tax positions. The Company accrues for the estimated amount of taxes for uncertain tax positions if it is more likely than not that the Company would be required to pay such additional taxes. An uncertain tax position will not be recognized if it has less than a 50% likelihood of being sustained. As of the date of adoption of this guidance, the Company did not have any accrued interest or penalties associated with any unrecognized tax positions, and there were no such interest or penalties recognized during the three and nine months ended September 30, 2013 and 2012. |
Advertising |
Advertising costs, which are included in sales and marketing expenses, are expensed as incurred. Advertising expense was $0.2 million and $0.4 million for the three months ended September 30, 2013 and 2012, respectively, and $0.7 million for each of the nine months ended September 30, 2013 and 2012. |
Stock-Based Compensation |
The Company accounts for stock-based compensation arrangements with employees and non-employee directors using a fair value method that requires the recognition of compensation expense for costs related to all stock-based payments, including stock options and restricted stock units. The fair value method requires the Company to estimate the fair value of stock options on the date of grant using an option pricing model. The fair value of restricted stock units is estimated based on the closing price of the Company's stock on the date of grant, and for the purposes of expense recognition, the total new number of shares expected to vest is adjusted for estimated forfeitures. |
Stock-based compensation costs for stock options are based on the fair value of the underlying option calculated using the Black-Scholes option-pricing model on the date of grant for stock options and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, forfeiture rates and expected term. The expected volatility rates are estimated based on the actual volatility of comparable public companies over the expected term. The expected term represents the average time that options are expected to be outstanding based on the mid-point between the vesting date and the end of the contractual term of the award. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company has not paid dividends and does not anticipate paying a cash dividend in the foreseeable future and, accordingly, uses an expected dividend yield of zero. The risk-free interest rate is based on the rate of U.S. Treasury securities with maturities consistent with the estimated expected term of the awards. The measurement of nonemployee share-based compensation is subject to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over the period over which services are received. |
Segment Reporting |
The Company operates in one operating segment. The Company's chief operating decision maker (the “CODM”), currently its interim chief executive officer, manages the Company's operations on an integrated basis for purposes of allocating resources. When evaluating the Company's financial performance, the CODM reviews separate revenue information for the Company's patient care testing and its research services, while all other financial information is reviewed on a combined basis. All of the Company's principal operations and decision-making functions are located in the United States. Accordingly, the Company has determined that it has a single reporting segment. |
Off-Balance Sheet Arrangements |
Through September 30, 2013, the Company has not entered into any off-balance sheet arrangements, other than the operating leases described in Note 14, and does not have any holdings in variable interest entities. |
Recent Accounting Pronouncements |
In October 2012, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2012-04, Technical Corrections and Improvements. The amendments in this update cover a wide range of topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. For public companies, the amendments that are subject to the transition guidance were effective for reporting periods beginning after December 15, 2012. Accordingly, the Company adopted this update on January 1, 2013. Adoption of this new guidance had no material impact on the Company's financial statements. |
In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in this update are intended to improve the reporting of reclassifications out of accumulated other comprehensive income by requiring an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required to be reclassified in its entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required that provide additional detail about those amounts. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is reclassified to a balance sheet account instead of directly to income or expense in the same reporting period. For public companies, the amendments that are subject to this update were effective for interim and annual reporting periods beginning after December 15, 2012. Accordingly, the Company adopted this update on January 1, 2013. Adoption of this new guidance had no material impact on the Company's financial statements. |
In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The amendments in this update provide clarification, and are intended to reduce diversity in practice, on the financial statement presentation of unrecognized tax benefits. The guidance specifies that an unrecognized tax benefit (or a portion thereof) shall be presented in the financial statements as a reduction to a deferred tax asset when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. If such deferred tax asset is not available at the reporting date to settle additional income taxes resulting from the disallowance of a tax position, or the entity does not plan to use the deferred tax asset for such purpose given the option, the unrecognized tax benefit shall be presented in the financial statements as a liability and shall not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. For public companies, the amendments that are subject to this update are effective for interim and annual reporting periods beginning after December 15, 2013, with early adoption permitted. The Company’s current practice is consistent with the amendments in this update. The Company expects that the new guidance will have no material impact on the Company’s financial statements. |