Mitcham Industries Announces Settlement Agreement Of Canadian Tax Audit And Provides Operational Update
HUNTSVILLE, Texas, Aug. 9, 2012 /PRNewswire/ -- Mitcham Industries, Inc. (NASDAQ: MIND) announced today that a settlement agreement has been reached among the Company, the Internal Revenue Service and the Canadian Revenue Authority in regards to matters arising from an audit of tax returns of the Company's Canadian subsidiary for the years ended January 31, 2004, 2005 and 2006. The resolution of these matters, which have been previously disclosed, was achieved through the competent authority process in the United States – Canada tax treaty. This settlement re-allocates certain deductions between the United States and Canada and resolves certain disputed matters arising in the Canadian tax audits. As a result of this resolution, the Company expects to record a tax benefit of approximately $5.0 million in its second fiscal quarter ended July 31, 2012. This benefit arises primarily from the recognition of uncertain tax positions that the Company had not previously recognized. The settlement also results in some taxes previously paid and tax deposits made in connection with the protest of the Canadian tax audits becoming available to apply against current tax obligations or for refund. The total amount of these cash effects is estimated to be approximately $4.0 million.
The Company also provided today an operational update on its equipment leasing operations for the second quarter of fiscal 2013. Preliminary unaudited results indicate that, as expected, leasing revenues did decline sequentially in the second quarter due to normal seasonal factors. Delays in the start-up of various projects, primarily in South America, due to permitting and weather issues that were experienced in the first quarter of fiscal 2013 continued into the second quarter. This has resulted in second quarter 2013 leasing revenues that are lower than originally anticipated. Based on preliminary results, it is likely that reported leasing revenues for the second quarter of fiscal 2013 will be approximately $10.0 to $11.0 million, which is below the $12.3 million reported for the second quarter of fiscal 2012.
Bill Mitcham, the Company's President and CEO, stated, "We are pleased to have resolved these outstanding tax issues on such a favorable basis as this settlement will allow us to book a substantial amount of additional net income in the second quarter of this year and will result in significant cash flow benefits.
"The second quarter shortfall in leasing revenues is disappointing, but activity has already started to pick up as several jobs in South America have begun, or are about to begin, following the delays previously announced. Based on discussions with our South American customers, we expect a much stronger second half of 2012. Bid activity in other geographic areas is also improving, and preliminary feedback from our customers indicates that activity levels in the Canadian and Russian winter seasons are anticipated to be stronger than last year."
Mitcham Industries, Inc., a geophysical equipment supplier, offers for lease or sale, new and "experienced" seismic equipment to the oil and gas industry, seismic contractors, environmental agencies, government agencies and universities. Headquartered in Texas, with sales and services offices in Calgary, Canada; Brisbane, Australia; Singapore; Ufa, Bashkortostan, Russia; Budapest, Hungary; Lima, Peru; Bogota, Colombia and the United Kingdom, Mitcham conducts operations on a global scale and is the largest independent exploration equipment lessor in the industry. Through its Seamap business, the Company designs, manufactures and sells specialized seismic marine equipment.
Certain statements and information in this press release concerning results for the quarter ended April 30, 2012 may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," "plan," "intend," "should," "would," "could" or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts of our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections.
For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publically update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
Billy F. Mitcham, Jr., President & CEO
Mitcham Industries, Inc.
Jack Lascar / Karen Roan
Dennard Rupp Gray &Lascar (DRG&L)
SOURCE Mitcham Industries, Inc.
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