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<div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>10. Income Taxes</b> </div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left"> The tax provision for each year-to-date period is calculated by multiplying pretax income by the estimated annual effective tax rate for such period. 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, as a result of our inability to recognize a tax benefit for losses generated by certain unprofitable operations and as a result of the varying mix of income earned in the jurisdictions in which we operate. Deferred tax assets and liabilities are established for tax attributes (credits or loss carryforwards) and temporary differences between the book and tax basis of assets and liabilities. Within each jurisdiction and taxpaying component, current and noncurrent deferred tax assets and liabilities are combined and presented as a net amount. Deferred tax assets are reduced by a valuation allowance when, based upon available evidence, it is more likely than not that the tax benefit of loss carryforwards (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. Conversely, in periods when operating units subject to a valuation allowance generate pretax losses, the corresponding increase in the valuation allowance has an unfavorable impact on our effective tax rate. We have decreased our December 31, 2010 deferred tax assets (current and non-current) and noncurrent deferred tax liabilities in equal amounts in order to reflect the net presentation of deferred tax assets and liabilities by jurisdiction consistent with our March 31, 2011 presentation. </div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left"> <u><i>Fiscal Year 2011</i></u> </div>
<div style="margin-top: 6pt; margin-left: 3%; font-size: 10pt;" align="left"> Our effective tax rate for the fiscal first three months of 2011 was lower than the U.S. statutory rate of 35% due principally to the net impact of the following: </div>
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<td>Income earned in tax jurisdictions with tax rates lower than the U.S. statutory rate, which is expected to contribute to an approximate 14-percentage point reduction in the effective tax rate for the full year 2011.</td></tr></table></div>
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<td>A valuation allowance increase for the quarter because we are unable to recognize a tax benefit for year-to-date losses subject to valuation allowance in the United States.</td></tr></table></div>
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<td>Discrete items for the quarter, including, primarily, changes in judgment regarding unrecognized tax benefits and certain adjustments to deferred taxes and taxes payable for prior years.</td></tr></table></div>
<div style="margin-top: 6pt; margin-left: 3%; font-size: 10pt;" align="left"> Both the valuation allowance increase and the discrete items for the quarter are not expected to significantly change the effective tax rate for the full year 2011. </div>
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<tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="100%"> <u><i>Fiscal Year 2010</i></u></td></tr></table></div>
<div style="margin-top: 6pt; margin-left: 3%; font-size: 10pt;" align="left"> Our effective tax rate for the fiscal first three months of 2010 was lower than the U.S. statutory rate of 35% due principally to the impact of the following: </div>
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<td>Income earned in tax jurisdictions with tax rates lower than the U.S. statutory rate, which contributed to an approximate 19-percentage point reduction in the effective tax rate.</td></tr></table></div>
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<td>Total changes in our valuation allowance contributed to an approximate five-percentage point increase in the effective tax rate as a result of the impact of a net valuation allowance increase because we are unable to recognize a tax benefit for losses subject to valuation allowance in certain jurisdictions (primarily the United States).</td></tr></table></div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left"> We evaluate, on a quarterly basis, the need for the valuation allowances against deferred tax assets in those jurisdictions in which we currently maintain a valuation allowance. Such evaluation includes a review of all available evidence, both positive and negative, in determining whether a valuation allowance is necessary. </div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left"> Our subsidiaries file income tax returns in numerous tax jurisdictions, including the United States, several U.S. states and numerous non-U.S. jurisdictions around the world. Tax returns are also filed in jurisdictions where our subsidiaries execute project-related work. The statute of limitations varies by jurisdiction. Because of the number of jurisdictions in which we file tax returns, in any given year the statute of limitations in a number of jurisdictions may expire within 12 months from the balance sheet date. As a result, we expect recurring changes in unrecognized tax benefits due to the expiration of the statute of limitations, none of which are expected to be individually significant. With few exceptions, we are no longer subject to U.S. (including federal, state and local) or non-U.S. income tax examinations by tax authorities for years before fiscal year 2006. </div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left"> A number of tax years are under audit by the relevant tax authorities in various jurisdictions, including the U.S. and several states within the U.S. We anticipate that several of these audits may be concluded in the foreseeable future, including in the remainder of fiscal year 2011. Based on the status of these audits, it is reasonably possible that the conclusion of the audits may result in a reduction of unrecognized tax benefits. However, it is not possible to estimate the magnitude of any such reduction at this time. We recognize interest accrued on the unrecognized tax benefits in interest expense and penalties on the unrecognized tax benefits in other deductions, net on our consolidated statement of operations. </div></div></div></div> </div>10. Income Taxes
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-Name Regulation S-X (SX)
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-Name Statement of Financial Accounting Standard (FAS)
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-Name Statement of Financial Accounting Standard (FAS)
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