correction of immaterial errors in the fourth quarter of 2011 , management discovered prior period tax errors related mainly to transfer pricing . the cumulative adjustment for the tax errors covering the period from february 1 , 2007 to january 31 , 2011 , was approximately $ 315 thousand . the adjustment applicable to the fourth quarter of 2010 was approximately $ 135 thousand and the adjustment applicable to prior years ( february 2007 - january 2010 ) totaled approximately $ 180 thousand . pursuant to the guidance of sec staff accounting bulletin ( `` sab `` ) no . 99 , materiality , the company concluded that the errors were not material to any of its prior period financial statements . however , in accordance with sab no . 108 , considering the effects of prior year misstatements when quantifying misstatements in the current year financial statements , the prior period financial statements were revised . prior period amounts stated in this form 10-k have been revised to facilitate comparability between current and prior year periods . for further information , see note 7 correction of immaterial errors - in the notes to consolidated financial statements . 2011 compared to 2010 net sales were $ 233.5 million in 2011 , an increase of 7 % from $ 219 million in 2010 . sales increased in filtration products , industrial process cooling and hvac . piping systems ' sales declined due to reduced activity at the u.a.e . facility and no large project related revenue at the india facility . gross profit of $ 36 million in 2011 decreased 18 % from $ 44 million in 2010 . gross margin was 16 % compared to 20 % in 2010 . gross profit increased significantly in filtration products , industrial process cooling and hvac due to increased sales volume and margin improvements . piping systems ' gross profit decreased considerably to $ 14.4 million in 2011 from $ 27.3 million in 2010 due to lower volume at the u.a.e . facility and no large project related activity at the india facility . in the second quarter , piping systems also incurred a one-time extended service claim of approximately $ 0.6 million . general and administrative expenses decreased 6 % to $ 26.3 million from $ 28 million . the reduction was mainly due to lower profit-based management incentive compensation expense , lower stock compensation expense and lower legal expenses partially offset by start-up costs for piping systems ' new facility in saudi arabia . selling expenses increased 11 % to $ 15.1 million from $ 13.6 million . a change in piping systems ' domestic sales commission program resulted in increased sales commission expense , additional sales in industrial process cooling led to higher commission expense and higher healthcare costs were partially offset by reduced costs from closing the facility in south africa recorded in 2010. the company 's worldwide effective income tax rates , ( `` etr `` ) , for 2011 and 2010 were ( 0.3 ) % and ( 67.0 ) % , respectively . for additional information , see the income tax section of the md & a and see note 8 - income taxes in the notes to the financial statements . net loss was $ 5 million compared to net income of $ 4.4 million in 2010. this change is mainly the result of lower volume at the u.a.e . facility and no large project related activity at the india facility . furthermore piping systems incurred expenses of $ 1.0 million for the fourth quarter and $ 2.3 million for 2011 relating to the new start-up facility in saudi arabia . piping systems the adverse effect of the credit crisis experienced by the emirate of dubai has significantly decelerated construction activity both in the u.a.e . and across other gcc countries , negatively impacting sales volume at the u.a.e . facility . the manufacturing facility in dammam , saudi arabia is production ready and staff has been recruited and trained . initial customer orders have been received , technical submittals are awaiting approval and procurement of raw materials is currently underway . expenses of $ 1.0 million for the fourth quarter and $ 2.3 million for 2011 relating to this new start-up facility were recorded to cost of goods sold , general and administrative and selling expenses . piping systems ' domestic sales and earnings are seasonal , typically lower during the fourth and first quarters due to unfavorable weather for construction over much of north america and are correspondingly higher during the second and third quarters . replace_table_token_3_th despite significant sales drops in the middle east and india , net sales of $ 97 million decreased only 7 % from $ 104.6 million , in the prior-year due to reduced activity at the u.a.e . facility and no large project related revenue at the india facility , partially offset by a rise in domestic oil and gas product sales . gross margin decreased to 15 % of net sales from 26 % of net sales in the prior-year due to lower volume at the u.a.e . facility and no large project related activity at the india facility . in the second quarter , piping systems incurred a one-time extended service claim of approximately $ 0.6 million . general and administrative expense decreased to $ 9 million or 9.5 % of net sales in 2011 from $ 10 million or 9.9 % of net sales in 2010 . the reduction in general and administrative expenses was due to lower profit based management incentive compensation , legal expenses and reduced staffing at the u.a.e . location , partially offset by increased healthcare costs . selling expense increased to $ 4 million or 4 % of net sales in 2011 from $ 3 million or 3 % of net sales in 2010 . story_separator_special_tag the excess foreign tax credits are subject to a ten-year carryforward and will expire in 2022. during 2011 , the company reevaluated the need for a valuation allowance against deferred tax assets and determined that no reserve was needed . as of january 31 , 2011 and january 31 , 2012 , no valuation allowance was deemed necessary on all domestic deferred tax assets except for certain state net operating losses , ( `` nol `` ) . the company believes that it will be more likely than not that the research and development credits will be utilized within the next five years ; therefore , the company has released the valuation allowance of $ 0.8 million for the $ 1.3 million research and development credits established in 2009. 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 . 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 ability 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 . a reconciliation of the etr to the u.s. statutory tax rate is as follows : replace_table_token_6_th for further information , see note 8 - income taxes in the notes to consolidated financial statements . liquidity and capital resources story_separator_special_tag style= `` font-family : inherit ; font-size:11pt ; color : # 000000 ; text-decoration : none ; `` > $ 3.8 million remained unused . critical accounting estimates and policies the company 's significant accounting policies are discussed in the notes to the consolidated financial statements included in item 8 of this annual report on form 10-k. the application of certain of these policies requires significant judgments or a historical based estimation process that can affect the results of operations and financial position of the company as well as the related footnote disclosures . the company bases its estimates on historical experience and other assumptions that it believes are reasonable . if actual amounts ultimately differ from previous estimates , the revisions are included in the company 's results of operations for the period in which the actual amounts become known . revenue recognition . the company recognizes revenues including shipping and handling charges billed to customers , when all the following criteria are met : ( i ) persuasive evidence of an arrangement exists , ( ii ) the seller 's price to the buyer is fixed or determinable , and ( iii ) collectability is reasonably assured . all subsidiaries of the company , except as noted below , recognize revenues upon shipment or delivery of goods or services when title and risk of loss pass to customers . percentage of completion method revenue recognition . all divisions recognize revenues under the above stated revenue recognition policy except for sizable complex contracts that require periodic recognition of income . for these contracts , the company uses the `` percentage of completion `` accounting method . under this approach , income is recognized in each reporting period based on the status of the uncompleted contracts and the current estimates of costs to complete . the choice of accounting method is made at the time the contract is received based on the expected length and complexity of the project . the percentage of completion is determined by the relationship of costs incurred to the total estimated costs of the contract . provisions are made for estimated losses on uncompleted contracts in the period in which such losses are determined . changes in job performance , job conditions , and estimated profitability , including those arising from contract penalty provisions and final contract settlements , may result in revisions to costs and income . such revisions are recognized in the period in which they are determined . claims for additional compensation due the company are recognized in contract revenues when realization is probable and the amount can be reliably estimated . inventories . inventories are stated at the lower of cost or market . cost is determined using the first-in , first-out method for all inventories . income taxes . deferred income taxes have been provided for temporary differences arising from differences in the basis of assets and liabilities for tax and financial reporting purposes . deferred income taxes on temporary differences have been recorded at the current tax rate . the company assesses its deferred tax assets for realizability at each reporting period . the company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit . for tax positions meeting the more 16 likely than not threshold , the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority . equity-based compensation . stock compensation expense for employee equity awards is recognized ratably over the requisite service period of the award . the black-scholes option-pricing model is utilized to estimate the fair value of awards . determining the fair value of stock options using the black-scholes model requires judgment , including estimates for ( 1 ) risk-free interest rate - an estimate based on the yield of zero-coupon treasury securities with a maturity equal to the expected life of the option ; ( 2 ) expected volatility - an estimate based on the historical volatility of the

cash and cash equivalents as of january 31 , 2012 were $ 4.2 million as compared to $ 16.7 million at january 31 , 2011 . the decrease was primarily for the new facility in saudi arabia . the company 's working capital was $ 43 million at january 31 , 2012 compared to $ 59 million at january 31 , 2011 . cash used in operations in 2011 was $ 0.2 million compared to cash provided by operations of $ 8.7 million at january 31 , 2011 . in july 2011 , the company recorded a one-time $ 1.8 million 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 for fed eral income taxes . the company does not intend to repatriate remaining unremitted foreign earnings and anticipates reinvesting these earnings overseas to fund current working capital requirements and expansion in foreign markets . if the company repatriates unremitted foreign earnings , it will have negative tax implications . 14 net cash used in investing activities in 2011 included $ 10 million for capital expenditures , primarily for machinery and equipment in piping systems of which $ 6.6 million was related to the new plant in saudi arabia . the company estimates that capital expenditures for 2012 will be approximately $ 8 million , of which the company may finance capital expenditures through real estate mortgages , equipment financing loans , internally generated funds and its revolving line of credit . the majority of such expenditures relates to foreign growth within piping systems . debt totaled $ 37.4 million at january 31 , 2012 , a decrease of $ 2 million since january 31 , 2011 . net cash used by financing activities was $ 1.9 million .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```cash and cash equivalents as of january 31 , 2012 were $ 4.2 million as compared to $ 16.7 million at january 31 , 2011 . the decrease was primarily for the new facility in saudi arabia . the company 's working capital was $ 43 million at january 31 , 2012 compared to $ 59 million at january 31 , 2011 . cash used in operations in 2011 was $ 0.2 million compared to cash provided by operations of $ 8.7 million at january 31 , 2011 . in july 2011 , the company recorded a one-time $ 1.8 million 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 for fed eral income taxes . the company does not intend to repatriate remaining unremitted foreign earnings and anticipates reinvesting these earnings overseas to fund current working capital requirements and expansion in foreign markets . if the company repatriates unremitted foreign earnings , it will have negative tax implications . 14 net cash used in investing activities in 2011 included $ 10 million for capital expenditures , primarily for machinery and equipment in piping systems of which $ 6.6 million was related to the new plant in saudi arabia . the company estimates that capital expenditures for 2012 will be approximately $ 8 million , of which the company may finance capital expenditures through real estate mortgages , equipment financing loans , internally generated funds and its revolving line of credit . the majority of such expenditures relates to foreign growth within piping systems . debt totaled $ 37.4 million at january 31 , 2012 , a decrease of $ 2 million since january 31 , 2011 . net cash used by financing activities was $ 1.9 million .
```    
 Suspicious Activity Report : correction of immaterial errors in the fourth quarter of 2011 , management discovered prior period tax errors related mainly to transfer pricing . the cumulative adjustment for the tax errors covering the period from february 1 , 2007 to january 31 , 2011 , was approximately $ 315 thousand . the adjustment applicable to the fourth quarter of 2010 was approximately $ 135 thousand and the adjustment applicable to prior years ( february 2007 - january 2010 ) totaled approximately $ 180 thousand . pursuant to the guidance of sec staff accounting bulletin ( `` sab `` ) no . 99 , materiality , the company concluded that the errors were not material to any of its prior period financial statements . however , in accordance with sab no . 108 , considering the effects of prior year misstatements when quantifying misstatements in the current year financial statements , the prior period financial statements were revised . prior period amounts stated in this form 10-k have been revised to facilitate comparability between current and prior year periods . for further information , see note 7 correction of immaterial errors - in the notes to consolidated financial statements . 2011 compared to 2010 net sales were $ 233.5 million in 2011 , an increase of 7 % from $ 219 million in 2010 . sales increased in filtration products , industrial process cooling and hvac . piping systems ' sales declined due to reduced activity at the u.a.e . facility and no large project related revenue at the india facility . gross profit of $ 36 million in 2011 decreased 18 % from $ 44 million in 2010 . gross margin was 16 % compared to 20 % in 2010 . gross profit increased significantly in filtration products , industrial process cooling and hvac due to increased sales volume and margin improvements . piping systems ' gross profit decreased considerably to $ 14.4 million in 2011 from $ 27.3 million in 2010 due to lower volume at the u.a.e . facility and no large project related activity at the india facility . in the second quarter , piping systems also incurred a one-time extended service claim of approximately $ 0.6 million . general and administrative expenses decreased 6 % to $ 26.3 million from $ 28 million . the reduction was mainly due to lower profit-based management incentive compensation expense , lower stock compensation expense and lower legal expenses partially offset by start-up costs for piping systems ' new facility in saudi arabia . selling expenses increased 11 % to $ 15.1 million from $ 13.6 million . a change in piping systems ' domestic sales commission program resulted in increased sales commission expense , additional sales in industrial process cooling led to higher commission expense and higher healthcare costs were partially offset by reduced costs from closing the facility in south africa recorded in 2010. the company 's worldwide effective income tax rates , ( `` etr `` ) , for 2011 and 2010 were ( 0.3 ) % and ( 67.0 ) % , respectively . for additional information , see the income tax section of the md & a and see note 8 - income taxes in the notes to the financial statements . net loss was $ 5 million compared to net income of $ 4.4 million in 2010. this change is mainly the result of lower volume at the u.a.e . facility and no large project related activity at the india facility . furthermore piping systems incurred expenses of $ 1.0 million for the fourth quarter and $ 2.3 million for 2011 relating to the new start-up facility in saudi arabia . piping systems the adverse effect of the credit crisis experienced by the emirate of dubai has significantly decelerated construction activity both in the u.a.e . and across other gcc countries , negatively impacting sales volume at the u.a.e . facility . the manufacturing facility in dammam , saudi arabia is production ready and staff has been recruited and trained . initial customer orders have been received , technical submittals are awaiting approval and procurement of raw materials is currently underway . expenses of $ 1.0 million for the fourth quarter and $ 2.3 million for 2011 relating to this new start-up facility were recorded to cost of goods sold , general and administrative and selling expenses . piping systems ' domestic sales and earnings are seasonal , typically lower during the fourth and first quarters due to unfavorable weather for construction over much of north america and are correspondingly higher during the second and third quarters . replace_table_token_3_th despite significant sales drops in the middle east and india , net sales of $ 97 million decreased only 7 % from $ 104.6 million , in the prior-year due to reduced activity at the u.a.e . facility and no large project related revenue at the india facility , partially offset by a rise in domestic oil and gas product sales . gross margin decreased to 15 % of net sales from 26 % of net sales in the prior-year due to lower volume at the u.a.e . facility and no large project related activity at the india facility . in the second quarter , piping systems incurred a one-time extended service claim of approximately $ 0.6 million . general and administrative expense decreased to $ 9 million or 9.5 % of net sales in 2011 from $ 10 million or 9.9 % of net sales in 2010 . the reduction in general and administrative expenses was due to lower profit based management incentive compensation , legal expenses and reduced staffing at the u.a.e . location , partially offset by increased healthcare costs . selling expense increased to $ 4 million or 4 % of net sales in 2011 from $ 3 million or 3 % of net sales in 2010 . story_separator_special_tag the excess foreign tax credits are subject to a ten-year carryforward and will expire in 2022. during 2011 , the company reevaluated the need for a valuation allowance against deferred tax assets and determined that no reserve was needed . as of january 31 , 2011 and january 31 , 2012 , no valuation allowance was deemed necessary on all domestic deferred tax assets except for certain state net operating losses , ( `` nol `` ) . the company believes that it will be more likely than not that the research and development credits will be utilized within the next five years ; therefore , the company has released the valuation allowance of $ 0.8 million for the $ 1.3 million research and development credits established in 2009. 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 . 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 ability 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 . a reconciliation of the etr to the u.s. statutory tax rate is as follows : replace_table_token_6_th for further information , see note 8 - income taxes in the notes to consolidated financial statements . liquidity and capital resources story_separator_special_tag style= `` font-family : inherit ; font-size:11pt ; color : # 000000 ; text-decoration : none ; `` > $ 3.8 million remained unused . critical accounting estimates and policies the company 's significant accounting policies are discussed in the notes to the consolidated financial statements included in item 8 of this annual report on form 10-k. the application of certain of these policies requires significant judgments or a historical based estimation process that can affect the results of operations and financial position of the company as well as the related footnote disclosures . the company bases its estimates on historical experience and other assumptions that it believes are reasonable . if actual amounts ultimately differ from previous estimates , the revisions are included in the company 's results of operations for the period in which the actual amounts become known . revenue recognition . the company recognizes revenues including shipping and handling charges billed to customers , when all the following criteria are met : ( i ) persuasive evidence of an arrangement exists , ( ii ) the seller 's price to the buyer is fixed or determinable , and ( iii ) collectability is reasonably assured . all subsidiaries of the company , except as noted below , recognize revenues upon shipment or delivery of goods or services when title and risk of loss pass to customers . percentage of completion method revenue recognition . all divisions recognize revenues under the above stated revenue recognition policy except for sizable complex contracts that require periodic recognition of income . for these contracts , the company uses the `` percentage of completion `` accounting method . under this approach , income is recognized in each reporting period based on the status of the uncompleted contracts and the current estimates of costs to complete . the choice of accounting method is made at the time the contract is received based on the expected length and complexity of the project . the percentage of completion is determined by the relationship of costs incurred to the total estimated costs of the contract . provisions are made for estimated losses on uncompleted contracts in the period in which such losses are determined . changes in job performance , job conditions , and estimated profitability , including those arising from contract penalty provisions and final contract settlements , may result in revisions to costs and income . such revisions are recognized in the period in which they are determined . claims for additional compensation due the company are recognized in contract revenues when realization is probable and the amount can be reliably estimated . inventories . inventories are stated at the lower of cost or market . cost is determined using the first-in , first-out method for all inventories . income taxes . deferred income taxes have been provided for temporary differences arising from differences in the basis of assets and liabilities for tax and financial reporting purposes . deferred income taxes on temporary differences have been recorded at the current tax rate . the company assesses its deferred tax assets for realizability at each reporting period . the company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit . for tax positions meeting the more 16 likely than not threshold , the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority . equity-based compensation . stock compensation expense for employee equity awards is recognized ratably over the requisite service period of the award . the black-scholes option-pricing model is utilized to estimate the fair value of awards . determining the fair value of stock options using the black-scholes model requires judgment , including estimates for ( 1 ) risk-free interest rate - an estimate based on the yield of zero-coupon treasury securities with a maturity equal to the expected life of the option ; ( 2 ) expected volatility - an estimate based on the historical volatility of the

