Fluor 2008 Annual Report Download - page 103

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,
2008 2007
(in thousands)
Deferred tax assets:
Accrued liabilities not currently deductible:
Employee compensation and benefits $205,939 $182,454
Employee time-off accrual 64,603 56,066
Project and non-project reserves 125,841 136,047
Workers’ compensation insurance accruals 9,306 12,226
Tax basis of investments in excess of book basis 50,783 47,620
Net operating loss carryforwards 34,564 28,295
Unrealized currency loss 13,103 6,571
Translation adjustments 33,920 —
Foreign tax credit carryforwards 9,413 74,769
Capital loss carryforwards 4,894 5,678
Residual U.S. tax on unremitted non-U.S. earnings — 9,847
Other 49,526 28,940
Total deferred tax assets 601,892 588,513
Valuation allowance for deferred tax assets (40,058) (59,057)
Deferred tax assets, net $561,834 $529,456
Deferred tax liabilities:
Book basis of property, equipment and other capital costs in excess of tax
basis (20,620) (10,933)
Translation adjustments — (53,283)
Other (6,325) (5,071)
Total deferred tax liabilities (26,945) (69,287)
Deferred tax assets, net of deferred tax liabilities $534,889 $460,169
The company had non-U.S. net operating loss carryforwards, related to various jurisdictions, of
approximately $128 million at December 31, 2008. Of the total losses, $90 million can be carried forward
indefinitely and $38 million will begin to expire in various jurisdictions starting in 2009.
The company had non-U.S. capital loss carryforwards of approximately $11 million at December 31,
2008, which can be carried forward indefinitely.
The company maintains a valuation allowance to reduce certain deferred tax assets to amounts that
are more likely than not to be realized. The allowance for 2008 primarily relates to the deferred tax assets
established for certain net operating and capital loss carryforwards and certain reserves on investments.
The net decrease in the valuation allowance during 2008 was primarily due to changes in the realizability of
U.S. foreign tax credit carryforwards, utilization of U.S. capital loss carryforwards and utilization of net
operating loss carryforwards. The allowance for 2007 primarily relates to the deferred tax assets
established for certain net operating and capital loss carryforwards for U.S. and non-U.S. subsidiaries,
certain reserves on investments and certain foreign tax credit carryforwards.
The company conducts business globally and, as a result, the company or one or more of its
subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign
jurisdictions. In the normal course of business the company is subject to examination by taxing authorities
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