Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Income Taxes

13.    Income Taxes

The reconciliation of continuing operations income tax computed at the Federal statutory tax rate to the provision (benefit) for income taxes is as follows (in thousands):

	December 31,
	2012			2011			2010
	As Restated
Tax at statutory rate	$	6,453		$	1,803		$	(8,368	)
State taxes, net of federal benefit		315			296			(1,374	)
Gain (loss) on debt extinguishment		0			(6,255	)		1,135
Change in valuation allowance		(11,761	)		2,928			(3,400	)
Cancellation of debt income		0			642			889
Debt repurchase premium		0			(213	)		0
Gain (loss) on derivative assets and liability		201			354			59
Nondeductible interest expense		0			107			1,172
Share-based compensation expense		266			267			109
Monetized credits		(242	)		(368	)		0
State tax rate adjustment		4,821			0			0
Permanent differences and others		173			71			30
	$	226		$	(368	)	$	(9,748	)

During the year ended December 31, 2012, a provision of $0.2 million was recorded for alternative minimum tax, or AMT, liability equal to approximately 2% (federal and California) of estimated year-to-date taxable income. The provision is primarily attributable to the $31.3 million taxable gain from the sale of the oilseed processing business to DSM. The Company currently believes it has available federal and California net operating loss carryforwards, or NOLs, to fully offset its taxable income for regular tax purposes; however, AMT still applies as a result of limitations on the ability to utilize AMT NOLs to offset AMT taxable income.

The 2011 current federal income tax benefit reflects refundable research credits. The Housing and Economic Recovery Act of 2008, enacted on July 30, 2008, and extended through 2009 by the American Recovery and Reinvestment Act of 2009, provided for the acceleration of a portion of unused pre-2006 research credits and alternative minimum tax credits in lieu of claiming the 50% bonus depreciation allowance enacted in the Economic Stimulus Act of 2008.

The 2010 current federal income tax benefit reflects the operation of the intraperiod tax allocation rules under which a tax benefit is provided in continuing operations to offset a tax provision recorded to discontinued operations.

The American Taxpayer Relief Act of 2012 (the “Act”) was signed into law on January 2, 2013. The Act retroactively restored several expired business tax provisions, including the research and experimentation credit. Because a change in tax law is accounted for in the period of enactment, the impact to the Company of the reinstated credit was not recognized in 2012. The additional credits that will be reported within the 2013 consolidated financial statements have no impact on operations due to the existence of a full valuation allowance on all deferred tax assets.

On July 13, 2006, the FASB issued authoritative guidance which clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements. A recognition threshold is prescribed and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. The impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely–than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.

The Company adopted the provisions on January 1, 2007, and has commenced analyzing filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The following is a reconciliation of the Company’s unrecognized tax benefits (in thousands):

	Years Ended December 31,
	2012			2011		2010
	As Restated
Unrecognized tax benefits—January 1	$	705		$	0	$	0
Gross increases related to current year tax positions		0			705		0
Gross decreases related to current year		(1	)		—		—
Unrecognized tax benefits—December 31	$	704		$	705	$	0

The Company is subject to taxation in the U.S. and state jurisdictions. The Company’s tax years for 2001 and forward are subject to examination by the U.S. and California tax authorities due to the carryforward of unutilized net operating losses and research and development credits. The Company is currently not under examination by any taxing authorities.

The balance of unrecognized tax benefits at December 31, 2012 of $0.7 million are tax benefits that, if the Company recognized, would not impact the Company’s effective tax rate. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. During the three years ended December 31, 2012, the Company did not recognize any interest or penalties. The Company does not foresee any material changes to unrecognized tax benefits within the next twelve months.

At December 31, 2012, the Company had deferred tax assets of $56.4 million. These deferred tax assets are primarily composed of net operating loss carryforwards, research and development tax credits, depreciation and amortization, and capitalized research and development costs. The deferred tax assets net with a deferred tax liability of $8.1 million related to the deferral of cancelation of debt income. Due to uncertainties surrounding the Company’s ability to generate future taxable income to realize these assets, a full valuation has been established to offset the net deferred tax asset. Additionally, the future utilization of the Company’s net operating loss and research and development credit carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that could occur in the future.

Significant components of the Company’s deferred tax assets are shown below. A valuation allowance of $48.3 million and $60 million has been recognized to offset the deferred tax assets at December 31, 2012 and 2011 as realization of such assets is uncertain.

The following table sets forth the detail of the Company’s deferred taxes (in thousands):

	As of December 31,
	2012			2011
				As Restated
Deferred tax assets:
Net operating loss carryforward	$	40,639		$	45,927
Federal and state tax credits		2,168			1,944
Deferred revenue		293			312
Depreciation and amortization		9,785			14,162
Allowance and accrued liabilities		1,162			1,389
Share-based compensation expense		351			445
Capitalized research and development		1,978			3,958
Total deferred tax assets		56,376			68,137
Valuation allowance		(48,258	)		(60,019	)
Net deferred tax assets	$	8,118		$	8,118
Deferred tax liabilities:
Cancellation of debt	$	8,118		$	8,118
Total deferred tax liabilities		8,118			8,118
Net deferred tax assets	$	—		$	—

At December 31, 2012, the Company has federal and state net operating loss carry-forwards of approximately $100.4 million and $93.2 million, respectively. The federal net operating loss carry-forwards will begin to expire in 2026 unless utilized. The state net operating loss carry-forwards will begin to expire in 2013 unless utilized. The Company also has federal research credits of approximately $0.5 million which begin to expire in 2028 and California research credits of approximately $2.4 million which will carryover indefinitely. The Company experienced changes in control that triggered the limitations of Section 382 of the Internal Revenue Code on the Company’s net operating loss carryforwards and research and development tax credits. The Section 382 limitations are reflected in the deferred tax assets for the net operating loss carryforwards of $40.6 million and research and development tax credits of $2.2 million presented above.

As a result of certain realization requirements of authoritative accounting guidance, the Company recognizes windfall tax benefits associated with the exercise of stock options directly to stockholders’ equity only when realized. Accordingly, deferred tax assets are not recognized for net operating loss carryforwards resulting from windfall tax benefits occurring from January 1, 2006 onward. At December 31, 2012, deferred tax assets do not include any excess tax benefits from share based compensation losses.