Fluor 2004 Annual Report Download - page 84

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FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Deferred taxes reflect the tax effects of differences between the amounts recorded as assets and liabilities for financial
reporting purposes and the amounts recorded for income tax purposes. The tax effects of significant temporary differences
giving rise to deferred tax assets and liabilities are as follows:
December 31
2004 2003
(in thousands)
Deferred tax assets:
Accrued liabilities not currently deductible:
Employee compensation and benefits $ 74,126 $ 58,289
Employee time-off accrual 42,313 41,155
Project performance and general reserves 47,555 36,829
Workers’ compensation insurance accruals 12,654 22,190
Tax credit carryforwards 24,870 46,641
Tax basis of investments in excess of book basis 23,878 23,558
Net operating loss carryforwards 16,556 20,703
Capital loss carryforwards 10,318 10,271
Lease related expenditures 8,586 6,838
Unrealized currency loss 2,294 1,790
Translation adjustments — 5,509
Other 9,656 15,012
Total deferred tax assets 272,806 288,785
Valuation allowance for deferred tax assets (57,914) (63,670)
Deferred tax assets, net $ 214,892 $ 225,115
Deferred tax liabilities:
Residual U.S. tax on unremitted non-U.S. earnings $ (27,500) $ (29,426)
Translation adjustments (14,781) —
Book basis of property, equipment and other capital costs in excess of tax basis (7,964) (6,532)
Other (5,105) (4,556)
Total deferred tax liabilities (55,350) (40,514)
Net deferred tax assets $ 159,542 $ 184,601
The company has U.S. and non-U.S. net operating loss carryforwards of approximately $40 million and $10 million,
respectively, at December 31, 2004. The utilization of the U.S. losses are subject to certain limitations. Of the $40 million
U.S. losses, $36 million will expire in the years 2020 and 2021 while the remaining $4 million will expire in the year 2005.
The non-U.S. losses largely relate to the company’s operations in the United Kingdom, Germany and Malaysia, and can be
carried forward indefinitely until fully utilized.
The company has U.S. and non-U.S. capital loss carryforwards of approximately $14 million and $15 million,
respectively, at December 31, 2004. The U.S. capital loss will expire in 2006 whereas the non-U.S. losses may be carried
forward indefinitely.
The company has foreign tax credit carryforwards of approximately $17 million, of which $11 million will expire in
2011 and $6 million in 2012. The company also has alternative minimum tax credit carryforwards of approximately
$8 million, which will never expire.
The company maintains a valuation allowance to reduce certain deferred tax assets to amounts that are more likely than
not to be realized. This allowance primarily relates to the deferred tax assets established for foreign tax credit and capital loss
carryforwards, certain project performance reserves and the net operating loss carryforwards of U.S. and certain
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