Attached files

file filename
10-Q - 10-Q - MFRI INCmfri2011q210q.htm
EXCEL - IDEA: XBRL DOCUMENT - MFRI INCFinancial_Report.xls
XML - IDEA: XBRL DOCUMENT - MFRI INCR4.htm
XML - IDEA: XBRL DOCUMENT - MFRI INCR9.htm
XML - IDEA: XBRL DOCUMENT - MFRI INCR2.htm
XML - IDEA: XBRL DOCUMENT - MFRI INCR5.htm
XML - IDEA: XBRL DOCUMENT - MFRI INCR6.htm
XML - IDEA: XBRL DOCUMENT - MFRI INCR1.htm
XML - IDEA: XBRL DOCUMENT - MFRI INCR7.htm
XML - IDEA: XBRL DOCUMENT - MFRI INCR3.htm
XML - IDEA: XBRL DOCUMENT - MFRI INCR16.htm
XML - IDEA: XBRL DOCUMENT - MFRI INCR15.htm
XML - IDEA: XBRL DOCUMENT - MFRI INCR10.htm
XML - IDEA: XBRL DOCUMENT - MFRI INCR14.htm
XML - IDEA: XBRL DOCUMENT - MFRI INCR12.htm
XML - IDEA: XBRL DOCUMENT - MFRI INCR13.htm
EX-32 - SECTION 1350 - MFRI INCmfri32q220111.htm
EX-31.1 - DAVID UNGER - MFRI INCmfri311q220111.htm
EX-31.2 - MICHAEL BENNETT - MFRI INCmfri312q220111.htm
XML - IDEA: XBRL DOCUMENT - MFRI INCR11.htm
v2.3.0.11
Income taxes
3 Months Ended
Jul. 31, 2011
Income Taxes [Abstract]  
Income Tax Disclosure [Text Block]
3.
Income taxes. Each quarter, the Company estimates the annual effective income tax rate ("ETR") for the full year and applies that rate to the income (loss) before income taxes in determining its provision for income taxes for the interim periods. The determination of the consolidated provision for income taxes, deferred tax assets and liabilities, related valuation allowances requires management to make judgments and estimates. As a company with subsidiaries in foreign jurisdictions, the process of calculating income taxes involves estimating current tax obligations and exposures in each jurisdiction as well as making judgments regarding the future recoverability of deferred tax assets. Income earned in the United Arab Emirates ("U.A.E.") is not subject to local country income tax. Additionally, the relative proportion of taxable income earned domestically versus internationally can fluctuate significantly from period to period. Changes in the estimated level of annual pre-tax income, tax laws and the results of tax audits can affect the overall effective income tax rate, which impacts the level of income tax expense and net income. Judgments and estimates related to the Company's projections and assumptions are inherently uncertain; therefore, actual results could differ materially from projections.


The Company's consolidated ETR was (46.4)% and (29.4)% for the six months ended July 31, 2011 and 2010, respectively. The July 31, 2011 computation of the projected annual tax rate has been significantly impacted by the loss in the U.A.E. for which no tax benefit can be provided. In July 2011, the Company recorded a one-time $1.8 million discrete tax expense associated with a $3.1 million repatriation of foreign earnings. This tax expense included a payment of $0.5 million to the foreign tax authority and an accrual of $1.3 million U.S. tax on foreign source income. No cash will be paid for this tax in the U.S. since the Company has a net operating loss carryforward. These foreign earnings were previously considered to be indefinitely reinvested outside the United States. The Company has not provided Federal tax on unremitted earnings of its international subsidiaries. The Company anticipates that unremitted earnings will be reinvested overseas to fund current working capital requirements and expansion in foreign markets. Accordingly, a provision for income tax expense in excess of foreign jurisdiction income tax requirements relative to such unremitted earnings has not been provided in the accompanying financial statements.


A deferred tax asset of $938 thousand has been recognized with an offsetting valuation allowance of $938 thousand for U.S. foreign tax credits attributed to repatriated foreign earnings. Net operating losses must be utilized before a foreign tax credit can be used. Realization of this deferred tax asset is dependent upon generating sufficient foreign sourced U.S. taxable income in the future. Currently management is uncertain such foreign income will be generated. The excess foreign tax credits are subject to a ten-year carryforward and will expire in 2022.


Based on current tax laws, the Company's annual effective tax rate for the year ending January 31, 2012 is expected to be significantly above the statutory rate.


The Company continues to review periodically the adequacy of its valuation allowance in all of the tax jurisdictions in which it operates and may make further adjustments based on management's outlook for continued profits in each jurisdiction.