XML 36 R16.htm IDEA: XBRL DOCUMENT
v2.4.0.6

Income taxes | 12 Months Ended
--- | ---
Jan. 31, 2012
Income Taxes [Abstract] |
Income Tax Disclosure [Text Block] | Note 8 - Income taxes
Income (loss) before income taxes | 2011 |  | 2010 |
Domestic | $4,517 | $(9,805)
Foreign | (9,487 | ) | 12,425 |
Total | $(4,970) | $2,620
Components of income tax expense (benefit) |  |
Current |  |
Federal | $183 | $(94)
Foreign | 627 |  | 1,880 |
State and other | 253 |  | 48 |
Subtotal | 1,063 |  | 1,834 |
Deferred |  |
Federal | (880 | ) | (3,510 | )
Foreign | (273 | ) | 155 |
State and other | 107 |  | (234 | )
Subtotal | (1,046 | ) | (3,589 | )
Total | $17 | $(1,755)
The excess tax (expense) benefit related to stock options recorded through equity and did not affect net (loss) income was ($5) thousand and $2 thousand in 2011 and 2010, respectively. The amounts were recorded to additional paid-in capital on the consolidated balance sheets and in operating activities in 2011 and financing activities in 2010 on the consolidated statement of cash flows. The determination of the consolidated provision for income taxes, deferred tax assets and liabilities, and the related valuation allowances requires management to make judgments and estimates. As a company with subsidiaries in foreign jurisdictions, the Company is required to calculate and provide for estimated income tax expense for each of the tax 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. Changes in the estimated level of annual pre-tax income, in tax laws, and resulting from tax audits can affect the overall ETR, 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 2011 and 2010 ETRs have been impacted by the mix of the U.A.E. (loss) earnings versus total (loss) earnings because the U.A.E. is not subject to any local country income tax. The ETR was less than the statutory U.S. federal income tax rate, mainly due to the large portion of loss and repatriation of foreign earnings in 2011 and income earned in 2010 in the U.A.E. Another contributing factor to the unusual ETR is the valuation allowance set up on the NOL in Saudi Arabia. The Company does not record a tax benefit for its start-up entities. The Company recorded a $1.8 million tax expense associated with the $3.1 million repatriation of foreign earnings that occurred in July 2011. These foreign earnings were previously considered to be indefinitely reinvested outside the United States. The repatriation was a one-time nonrecurring event. 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 $1.3 million has been established for U.S. foreign tax credits attributed to repatriated foreign earnings, resulting in a net tax of $0.5 million. The excess foreign tax credits are subject to a ten-year carryforward and will expire in 2022. Several valuation allowances impacted the ETRs. In 2011, the Company released a valuation allowance of $0.8 million established in 2009 for a portion of the research and development credits. In 2010, the Company closed its operations in South Africa and released intercompany liabilities. Related income was offset by an existing NOL for which a prior valuation allowance had been previously provided. This release of liabilities increased the federal NOL in 2010. The difference between the provision for income taxes and the amount computed by applying the Federal ETR of 34% was as follows:
| 2011 |  | 2010 |
Tax expense at federal statutory rate | ($1,690) | $890
Differences in foreign tax rate | 1,429 |  | (1,590 | )
Foreign tax credit | (1,300 | ) | — |
Research tax credit and release of valuation allowance | (951 | ) | — |
Repatriation | 1,810 |  | — |
Valuation allowance for foreign and state NOLs | 611 |  | (673 | )
Nontaxable income from the Canadian joint venture | (530 | ) | (334 | )
State taxes, net of federal benefit | 308 |  | (436 | )
All other, net expense | 330 |  | 388 |
Total |  | $17 |  |  | ($1,755 | )
Valuation allowances against foreign and state NOL benefits |  |
For current year NOL | $611 | ($673)
For prior year NOL carryovers | 601 |  | 1,274 |
Total |  | $1,212 |  |  | $601 |
The Company has a Federal operating loss carryforward of $11 million with a recognized tax benefit of $3.7 million that will begin to expire in the year ending January 31, 2030. At January 31, 2012, no valuation allowance was deemed necessary on all domestic deferred tax assets except for certain state NOLs. The Company periodically reviews the adequacy of its valuation allowance in all of the tax jurisdictions in which it operates, evaluates future sources of taxable income and tax planning strategies and may make further adjustments based on management's outlook for continued profits in each jurisdiction. The deferred tax asset for state NOL carryforwards of $921 thousand relates to amounts that expire at various times from 2012 to 2030. The amount that expired in 2011 is approximately $3 thousand. A valuation allowance has been established for approximately $333 thousand of this tax asset based upon an assessment that it is more likely than not that realization cannot be assured in these tax jurisdictions. The Company has a deferred tax asset for foreign NOL carryforwards of $2.7 million that can be carried forward indefinitely and does not have a valuation allowance recorded against it. The ultimate realization of this tax benefit is dependent upon the generation of sufficient operating income in the foreign tax jurisdictions. As of January 31, 2012, the Company had undistributed earnings of foreign subsidiaries for which deferred taxes have not been provided. The Company intends and has the opportunities to reinvest these earnings for the foreseeable future outside the U.S. If these amounts were distributed to the U.S., in the form of dividends or otherwise, the Company would be subject to additional U.S. income taxes. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because such liability, if any, is dependent on circumstances existing if and when remittance occurs. The most significant foreign entity, which has undistributed earnings is Perma-Pipe Middle East, FZC in the U.A.E., where cumulative undistributed earnings as of January 31, 2012 were $19 million.
Components of the deferred income tax asset | 2011 |  | 2010 |
U.S. Federal NOL carryforward | $3,728 | $5,707
Non-qualified deferred compensation | 1,968 |  | 1,780 |
Research tax credit | 1,858 |  | 1,721 |
Foreign NOL carryover | 2,726 |  | 1,120 |
Foreign tax credit | 1,300 |  | — |
Stock compensation | 1,243 |  | 1,050 |
Other accruals not yet deducted | 1,233 |  | 1,373 |
State NOL carryover | 921 |  | 933 |
Accrued commissions and incentives | 691 |  | 776 |
Accrued pension | 578 |  | — |
Inventory valuation allowance | 300 |  | 401 |
Other | 224 |  | 162 |
Inventory uniform capitalization | 128 |  | 111 |
Goodwill | 1 |  | 6 |
Subtotal | 16,899 |  | 15,140 |
Valuation allowance for net operating losses | (1,934 | ) | (601 | )
Valuation allowance for research tax credit | — |  | (814 | )
Total deferred tax assets, net of valuation allowances | $14,965 | $13,725
Components of the deferred income tax liability |  |
Depreciation | $1,733 | $2,029
Accrued pension | — |  | 566 |
Prepaid | 319 |  | 271 |
Total deferred tax liabilities | $2,052 | $2,866
Deferred income tax, net | $12,913 | $10,859
Balance sheet classification |  |
Current assets | $1,946 | $2,389
Long-term assets | 10,967 |  | 8,470 |
Total deferred tax assets, net of valuation allowances | $12,913 | $10,859
The following table summarizes unrecognized tax benefit activity, excluding the related accrual for interest and penalties:
| 2011 |  | 2010 |
Balance at beginning of the year | $1,202 | $1,009
Increases (decreases) in positions taken in a prior period | (52 | ) | — |
Increases in positions taken in a current period | 89 |  | 333 |
Decreases due to lapse of statute of limitations | (26 | ) | (140 | )
Balance at end of the year | $1,213 | $1,202
Included in the total unrecognized tax liability at January 31, 2012 were estimated accrued interest of $82 thousand and penalties of $82 thousand and at January 31, 2011, accrued interest and penalties were $91 thousand and $90 thousand, respectively. These non-current income tax liabilities are recorded in other long-term liabilities in the consolidated balance sheet. The Company's policy is to include interest and penalties in income tax expense. At January 31, 2012, the Company did not anticipate any significant adjustments to its unrecognized tax benefits caused by the settlement of the ongoing tax examinations detailed above, or other factors, within the next twelve months. Included in the balance at January 31, 2012 were amounts offset by deferred taxes (i.e., temporary differences) or amounts that could be offset by refunds in other taxing jurisdictions (i.e., corollary adjustments). Thus, $1.2 million of the amount accrued at January 31, 2012 and 2011 would impact the ETR, if reversed. The Company is subject to income taxes in the U.S. federal jurisdiction, and various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. Tax years back to January 31, 2009 are open for federal and state tax purposes. In addition, federal and state tax years January 31, 2004 through January 31, 2008 are subject to adjustment on audit, up to the amount of research tax credit generated in those years. The Company's management periodically estimates the probable tax obligations of the Company using historical experience in tax jurisdictions and informed judgments. There are inherent uncertainties related to the interpretation of tax regulations in the jurisdictions in which the Company transacts business. The judgments and estimates made at a point in time may change based on the outcome of tax audits, as well as changes to or further interpretations of regulations. If such changes take place, there is a risk that the tax rate may increase or decrease in any period. Tax accruals for tax liabilities related to potential changes in judgments and estimates for federal, foreign and state tax issues are included in current liabilities on the consolidated balance sh

X
- Details
Name: | mfri_IncomeTaxesAbstract
Namespace Prefix: | mfri_
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 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration