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These excerpts taken from the FWLT 10-K filed Feb 24, 2009. Provision
for Income Taxes:
Our effective tax rate can fluctuate significantly from period
to period and may differ significantly from the
U.S. federal statutory rate as a result of income taxed in
various
non-U.S. jurisdictions
with rates different from the U.S. statutory rate and also
as a result of our inability to recognize a tax benefit for
losses generated by certain unprofitable operations. In
addition, SFAS No. 109, “Accounting for Income
Taxes,” requires us to reduce our deferred tax benefits by
a valuation allowance when, based upon available evidence, it is
more likely than not that the tax benefit of losses (or other
deferred tax assets) will not be realized in the future. In
periods when operating units subject to a valuation allowance
generate pretax earnings, the corresponding reduction in the
valuation allowance favorably impacts our effective tax rate.
Our effective tax rate is, therefore, dependent on the location
and amount of our taxable earnings and the effects of changes in
valuation allowances.
Fiscal
Year 2008
Our effective tax rate for fiscal year 2008 was lower than the
U.S. statutory rate of 35% due principally to the impact of
the following:
These factors which reduce the effective tax rate were partially
offset by the establishment of a valuation allowance on deferred
tax assets in another of our
non-U.S. subsidiaries
and our inability to recognize a tax benefit for losses subject
to valuation allowance in certain other jurisdictions and other
permanent differences. Total changes in our valuation allowance
contributed to an approximate six-percentage point reduction in
the effective tax rate for fiscal year 2008.
Table of Contents
Fiscal
Year 2007
Our effective tax rate for fiscal year 2007 was lower than the
U.S. statutory rate of 35% due principally to the impact of
the following:
These variances were partially offset by losses in certain other
jurisdictions for which no benefit is recognized (a valuation
allowance is established) and other permanent differences.
Fiscal
Year 2006
Our effective tax rate for fiscal year 2006 was lower than the
U.S. statutory rate of 35% due principally to the impact of
the following:
These variances were partially offset by losses in certain other
jurisdictions for which no benefit is recognized (a valuation
allowance is established) and other permanent differences.
We monitor the jurisdictions for which valuation allowances
against deferred tax assets were established in previous years.
On a quarterly basis we evaluate the need for the valuation
allowances against deferred tax assets in those jurisdictions.
Such evaluation includes a review of all available evidence,
both positive and negative, in determining whether a valuation
allowance is necessary. If our trend for positive earnings
continues in those jurisdictions where we have recorded a
valuation allowance (primarily the United States), we may
conclude that a valuation allowance is no longer needed.
For statutory purposes, the majority of the U.S. federal
tax benefits, against which valuation allowances have been
established, do not expire until fiscal year 2024 and beyond,
based on current tax laws.
Provision
for Income Taxes:
Our effective tax rate can fluctuate significantly from period
to period and may differ significantly from the
U.S. federal statutory rate as a result of income taxed in
various
non-U.S. jurisdictions
with rates different from the U.S. statutory rate and also
as a result of our inability to recognize a tax benefit for
losses generated by certain unprofitable operations. In
addition, SFAS No. 109, “Accounting for Income
Taxes,” requires us to reduce our deferred tax benefits by
a valuation allowance when, based upon available evidence, it is
more likely than not that the tax benefit of losses (or other
deferred tax assets) will not be realized in the future. In
periods when operating units subject to a valuation allowance
generate pretax earnings, the corresponding reduction in the
valuation allowance favorably impacts our effective tax rate.
Our effective tax rate is, therefore, dependent on the location
and amount of our taxable earnings and the effects of changes in
valuation allowances.
Fiscal
Year 2008
Our effective tax rate for fiscal year 2008 was lower than the
U.S. statutory rate of 35% due principally to the impact of
the following:
These factors which reduce the effective tax rate were partially
offset by the establishment of a valuation allowance on deferred
tax assets in another of our
non-U.S. subsidiaries
and our inability to recognize a tax benefit for losses subject
to valuation allowance in certain other jurisdictions and other
permanent differences. Total changes in our valuation allowance
contributed to an approximate six-percentage point reduction in
the effective tax rate for fiscal year 2008.
Table of Contents
Fiscal
Year 2007
Our effective tax rate for fiscal year 2007 was lower than the
U.S. statutory rate of 35% due principally to the impact of
the following:
These variances were partially offset by losses in certain other
jurisdictions for which no benefit is recognized (a valuation
allowance is established) and other permanent differences.
Fiscal
Year 2006
Our effective tax rate for fiscal year 2006 was lower than the
U.S. statutory rate of 35% due principally to the impact of
the following:
These variances were partially offset by losses in certain other
jurisdictions for which no benefit is recognized (a valuation
allowance is established) and other permanent differences.
We monitor the jurisdictions for which valuation allowances
against deferred tax assets were established in previous years.
On a quarterly basis we evaluate the need for the valuation
allowances against deferred tax assets in those jurisdictions.
Such evaluation includes a review of all available evidence,
both positive and negative, in determining whether a valuation
allowance is necessary. If our trend for positive earnings
continues in those jurisdictions where we have recorded a
valuation allowance (primarily the United States), we may
conclude that a valuation allowance is no longer needed.
For statutory purposes, the majority of the U.S. federal
tax benefits, against which valuation allowances have been
established, do not expire until fiscal year 2024 and beyond,
based on current tax laws.
Provision for Income Taxes:
Our effective tax rate can fluctuate significantly from period to period and may differ significantly from the U.S. federal statutory rate as a result of income taxed in various non-U.S. jurisdictions with rates different from the U.S. statutory rate and also as a result of our inability to recognize a tax benefit for losses generated by certain unprofitable operations. In addition, SFAS No. 109, “Accounting for Income Taxes,” requires us to reduce our deferred tax benefits by a valuation allowance when, based upon available evidence, it is more likely than not that the tax benefit of losses (or other deferred tax assets) will not be realized in the future. In periods when operating units subject to a valuation allowance generate pretax earnings, the corresponding reduction in the valuation allowance favorably impacts our effective tax rate. Our effective tax rate is, therefore, dependent on the location and amount of our taxable earnings and the effects of changes in valuation allowances. Fiscal Year 2008 Our effective tax rate for fiscal year 2008 was lower than the U.S. statutory rate of 35% due principally to the impact of the following:
These factors which reduce the effective tax rate were partially offset by the establishment of a valuation allowance on deferred tax assets in another of our non-U.S. subsidiaries and our inability to recognize a tax benefit for losses subject to valuation allowance in certain other jurisdictions and other permanent differences. Total changes in our valuation allowance contributed to an approximate six-percentage point reduction in the effective tax rate for fiscal year 2008.
Table of ContentsFiscal Year 2007 Our effective tax rate for fiscal year 2007 was lower than the U.S. statutory rate of 35% due principally to the impact of the following:
These variances were partially offset by losses in certain other jurisdictions for which no benefit is recognized (a valuation allowance is established) and other permanent differences. Fiscal Year 2006 Our effective tax rate for fiscal year 2006 was lower than the U.S. statutory rate of 35% due principally to the impact of the following:
These variances were partially offset by losses in certain other jurisdictions for which no benefit is recognized (a valuation allowance is established) and other permanent differences. We monitor the jurisdictions for which valuation allowances against deferred tax assets were established in previous years. On a quarterly basis we evaluate the need for the valuation allowances against deferred tax assets in those jurisdictions. Such evaluation includes a review of all available evidence, both positive and negative, in determining whether a valuation allowance is necessary. If our trend for positive earnings continues in those jurisdictions where we have recorded a valuation allowance (primarily the United States), we may conclude that a valuation allowance is no longer needed. For statutory purposes, the majority of the U.S. federal tax benefits, against which valuation allowances have been established, do not expire until fiscal year 2024 and beyond, based on current tax laws. These excerpts taken from the FWLT 10-K filed Feb 26, 2008. Provision
for Income Taxes:
Our effective tax rate can fluctuate significantly from period
to period and may differ significantly from the
U.S. federal statutory rate as a result of the fact that
most of our operating units are profitable and are recording a
provision for
non-U.S.,
national
and/or local
income taxes, while others are unprofitable and are unable to
recognize a tax benefit for losses. SFAS No. 109,
“Accounting for Income Taxes,” requires us to reduce
our deferred tax benefits by a valuation allowance when, based
upon available evidence, it is more likely than not that the tax
benefit of losses (or other deferred tax assets) will not be
realized in the future. In periods when operating units subject
to a valuation allowance generate pretax earnings, the
corresponding reduction in the valuation allowance favorably
impacts our effective tax rate.
Our effective tax rate is, therefore, dependent on the location
and amount of our taxable earnings and the effects of changes in
valuation allowances. Compared to the U.S. statutory rate
of 35%, our effective tax rate for fiscal year 2007 was lower
because of
non-U.S. earnings
being taxed at rates lower than the U.S. statutory
Table of Contents
rate and because of earnings in jurisdictions where we have
previously recorded a full valuation allowance. These variances
were partially offset by losses in certain other jurisdictions
for which no benefit is recognized (a valuation allowance is
established) and other permanent differences.
Compared to the U.S. statutory rate of 35%, our effective
tax rate for fiscal year 2006 was lower because of
non-U.S. earnings
being taxed at rates lower than the U.S. statutory rate and
because of earnings in jurisdictions where we have previously
recorded a full valuation allowance (primarily the United
States). These variances were partially offset by losses in
certain other
non-U.S. jurisdictions
for which no benefit is recognized (a valuation allowance is
established) and because of other permanent differences. We
monitor valuation allowances against deferred tax assets in
jurisdictions where valuation allowances were established in
previous years. As we currently have positive earnings in most
jurisdictions, we evaluate on a quarterly basis the need for the
valuation allowances against deferred tax assets in those
jurisdictions. Such evaluation includes a review of all
available evidence, both positive and negative, in determining
whether a valuation allowance is necessary.
For statutory purposes, the majority of the U.S. federal
tax benefits, against which valuation allowances have been
established, do not expire until fiscal year 2024 and beyond,
based on current tax laws.
As described further under “Application of Critical
Accounting Estimates” within this Item 7, we adopted
the provisions of Financial Accounting Standards Board, or FASB,
Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes — an interpretation of FASB Statement
No. 109, Accounting for Income Taxes,” on
December 30, 2006, the first day of fiscal year 2007.
Provision for Income Taxes:
Our effective tax rate can fluctuate significantly from period to period and may differ significantly from the U.S. federal statutory rate as a result of the fact that most of our operating units are profitable and are recording a provision for non-U.S., national and/or local income taxes, while others are unprofitable and are unable to recognize a tax benefit for losses. SFAS No. 109, “Accounting for Income Taxes,” requires us to reduce our deferred tax benefits by a valuation allowance when, based upon available evidence, it is more likely than not that the tax benefit of losses (or other deferred tax assets) will not be realized in the future. In periods when operating units subject to a valuation allowance generate pretax earnings, the corresponding reduction in the valuation allowance favorably impacts our effective tax rate. Our effective tax rate is, therefore, dependent on the location and amount of our taxable earnings and the effects of changes in valuation allowances. Compared to the U.S. statutory rate of 35%, our effective tax rate for fiscal year 2007 was lower because of non-U.S. earnings being taxed at rates lower than the U.S. statutory
Table of Contentsrate and because of earnings in jurisdictions where we have previously recorded a full valuation allowance. These variances were partially offset by losses in certain other jurisdictions for which no benefit is recognized (a valuation allowance is established) and other permanent differences. Compared to the U.S. statutory rate of 35%, our effective tax rate for fiscal year 2006 was lower because of non-U.S. earnings being taxed at rates lower than the U.S. statutory rate and because of earnings in jurisdictions where we have previously recorded a full valuation allowance (primarily the United States). These variances were partially offset by losses in certain other non-U.S. jurisdictions for which no benefit is recognized (a valuation allowance is established) and because of other permanent differences. We monitor valuation allowances against deferred tax assets in jurisdictions where valuation allowances were established in previous years. As we currently have positive earnings in most jurisdictions, we evaluate on a quarterly basis the need for the valuation allowances against deferred tax assets in those jurisdictions. Such evaluation includes a review of all available evidence, both positive and negative, in determining whether a valuation allowance is necessary. For statutory purposes, the majority of the U.S. federal tax benefits, against which valuation allowances have been established, do not expire until fiscal year 2024 and beyond, based on current tax laws. As described further under “Application of Critical Accounting Estimates” within this Item 7, we adopted the provisions of Financial Accounting Standards Board, or FASB, Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109, Accounting for Income Taxes,” on December 30, 2006, the first day of fiscal year 2007. | EXCERPTS ON THIS PAGE:
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