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Pension Plans
12 Months Ended
Sep. 30, 2011
Pension Plans 
Pension Plans

7. Pension Plans

Company-Only Sponsored Plans

We sponsor various defined benefit pension plans covering employees of certain U.S. and international subsidiaries. The pension plans provide pension benefits that are based on the employee's compensation and years of service. Our funding policy is to fund the actuarially determined accrued benefits, allowing for projected compensation increases using the projected unit method.

The following table sets forth the changes in the plans' combined net benefit obligation (segregated between plans existing within and outside the U.S.) for each balance sheet presented (in thousands):

 

                                 
     U.S. Pension Plans     Non-U.S. Pension Plans  
     2011     2010     2011     2010  

Net benefit obligation at the beginning of the year

    $ 160,264      $ 148,532      $ 1,007,105      $ 842,928   

Service cost

      10,684        —          30,816        22,722   

Interest cost

      21,377        7,545        54,631        46,584   

Participants' contributions

      3,318        —          12,108        12,467   

Actuarial (gains)/losses

      30,378        12,300        (141,498 )      134,702   

Benefits paid

      (34,486 )      (8,113 )      (32,419 )      (25,283 ) 

Curtailments/settlements

      —          —          (3,744 )      (6,051 ) 

Transfers

      —          —          —          (35 ) 

Business combinations/consolidations

      290,887        —          49,638        —     

Special termination benefits

      120        —          —          —     

Effect of exchange rate changes

      —          —          (7,699 )      (20,929 ) 
    

 

 

    

 

 

    

 

 

    

 

 

  

Net benefit obligation at the end of the year

    $ 482,542      $ 160,264      $ 968,938     $ 1,007,105  
    

 

 

    

 

 

    

 

 

    

 

 

  

The following table sets forth the changes in the combined fair value of the plans' assets (segregated between plans existing within and outside the U.S.) for each balance sheet presented (in thousands):

 

                                 
     U.S. Pension Plans     Non-U.S. Pension Plans  
     2011     2010     2011     2010  

Fair value of plan assets at the beginning of the year

    $ 107,791      $ 106,313      $ 661,825      $ 573,189   

Actual return on plan assets

      1,899        9,591        3,729        79,409   

Employer contributions

      21,753        —          70,575        42,595   

Participants' contributions

      3,318        —          12,108        12,467   

Gross benefits paid

      (34,486 )      (8,113 )      (32,419 )      (25,283 ) 

Transfers

      —          —          —          (35 ) 

Business combinations/consolidations

      185,502        —          40,922        —     

Curtailments/settlements

      —          —          (3,744 )      (6,051 ) 

Effect of exchange rate changes

      —          —          (8,307 )      (14,466 ) 
    

 

 

        

 

    

 

 

    

 

 

  

Fair value of plan assets at the end of the year

    $ 285,777      $ 107,791      $ 744,689      $ 661,825   
    

 

 

    

 

 

    

 

 

    

 

 

  

 

The following table reconciles the combined funded statuses of the plans and recognized in the accompanying Consolidated Balance Sheets at September 30, 2011 and October 1, 2010 (segregated between plans existing within and outside the U.S.) (in thousands):

 

                                 
     U.S. Pension Plans      Non-U.S. Pension Plans  
     2011      2010      2011      2010  

Net benefit obligation at the end of the year

    $ 482,542       $ 160,264       $ 968,938       $ 1,007,105   

Fair value of plan assets at the end of the year

      285,777         107,791         744,689         661,825   
    

 

 

     

 

 

     

 

 

     

 

 

  

Under funded amount recognized at the end of the year

    $ 196,765       $ 52,473       $ 224,249       $ 345,280   
    

 

 

     

 

 

     

 

 

     

 

 

  

The following table presents the amounts recognized in the accompanying Consolidated Balance Sheets at September 30, 2011 and October 1, 2010 (segregated between plans existing within and outside the U.S.) (in thousands):

 

                                 
     U.S. Pension Plans      Non-U.S. Pension Plans  
     2011      2010      2011      2010  

Accrued benefit cost included in current liabilities

    $ —         $ —         $ 1,690       $ 1,473   

Accrued benefit cost included in noncurrent liabilities

      196,765         52,473         222,559         343,807   
    

 

 

     

 

 

     

 

 

     

 

 

  

Net amount recognized at the end of the year

    $ 196,765       $ 52,473       $ 224,249       $ 345,280   
    

 

 

     

 

 

     

 

 

     

 

 

  

Included in the tables above for fiscal 2011 are amounts relating to a pension plan in the U.S. covering employees of a certain entity which the Company began consolidating at the beginning of this fiscal year. The covered employees are assigned to a particular operating contract with the U.S. government; it is the intention of the parties to the contract that the cost of this pension plan will be fully reimbursed by the U.S. government pursuant to applicable cost accounting standards. Included in "Other Noncurrent Assets" in the accompanying Consolidated Balance Sheet at September 30, 2011 is a receivable from the U.S. government of approximately $140.9 million representing the underfunded amount for this pension plan.

The following table presents the significant actuarial assumptions used in determining the funded statuses of the Company's U.S. plans for each fiscal year presented:

 

                         
     2011     2010     2009  

Weighted average discount rates

      4.3% to 4.6 %      4.6 %      5.25 % 

Rates of compensation increases

      3.5 %      —        —   

The following table presents the significant actuarial assumptions used in determining the funded statuses of the Company's Non-U.S. plans for each fiscal year presented:

 

                         
     2011     2010     2009  

Weighted average discount rates

      2.6% to 5.9 %      2.1% to 5.1 %      2.5% to 5.6 % 

Rates of compensation increases

      3.0% to 3.5 %      3.25% to 3.5 %     
3.5
 % 

The following table presents certain amounts relating to our U.S. pension plans recognized in accumulated other comprehensive loss at September 30, 2011 and October 1, 2010 (in thousands):

 

                         
     2011     2010     2009  

Arising during the period:

                         

Net actuarial loss

    $ 7,486      $ 8,297      $ 24,585   

Reclassification adjustments:

                         

Net actuarial gain

      (2,011 )      (1,154 )      (811 ) 
    

 

 

    

 

 

    

 

 

  

Total

    $ 5,475     $ 7,143     $ 23,774  
    

 

 

    

 

 

    

 

 

  

 

The following table presents certain amounts relating to our Non-U.S. pension plans recognized in accumulated other comprehensive loss at September 30, 2011 and October 1, 2010 (in thousands):

 

                         
     2011     2010     2009  

Arising during the period:

                         

Net actuarial (gain) loss

    $ (73,258 )    $ 64,809      $ 63,028   

Prior service cost (benefit)

      1,005        (117 )      (32 ) 
    

 

 

    

 

 

    

 

 

  

Total

      (72,253 )      64,692        62,996   

Reclassification adjustments:

                         

Net actuarial gain

      (4,990 )      (7,646 )      (3,700 ) 

Prior service benefit

      (1,406 )      (193 )      (243 ) 
    

 

 

    

 

 

    

 

 

  

Total

      (6,396 )      (7,839 )      (3,943 ) 
    

 

 

    

 

 

    

 

 

  

Total

    $ (78,649 )   $ 56,853     $ 59,053  
    

 

 

    

 

 

    

 

 

  

The following table presents certain amounts relating to our pension plans recorded in accumulated other comprehensive loss that have not yet been recognized as components of net periodic pension cost at September 30, 2011 and October 1, 2010 (segregated between plans existing within and outside the U.S.) (in thousands):

 

                                 
     U.S. Pension Plans      Non-U.S. Pension Plans  
     2011      2010      2011      2010  

Net actuarial loss

    $ 68,224       $ 62,749       $ 124,560       $ 202,806   

Prior service cost

      —           —           1,166         1,569   
    

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 68,224       $ 62,749       $ 125,726       $ 204,375   
    

 

 

     

 

 

     

 

 

     

 

 

  

The following table presents the amount of accumulated comprehensive income that will be amortized against earnings as part of our net periodic pension cost in fiscal 2012 (segregated between plans existing within and outside the U.S.) (in thousands):

 

                 
     U.S.
Pension
Plans		      Non-U.S.
Pension
Plans		  

Unrecognized net actuarial loss

    $ 3,217       $ 8,138   

Unrecognized prior service cost

      —           247   
    

 

 

     

 

 

  

Accumulated comprehensive loss to be recorded against earnings

    $ 3,217       $ 8,385   
    

 

 

     

 

 

  

We consider various factors in developing the estimates for the expected, long-term rates of return on plan assets. These factors include the projected, long-term rates of returns on the various types of assets in which the plans invest, as well as historical returns. In general, investment allocations are determined by each plan's trustees and/or investment committees. The objectives of the plans' investment policies are to (i) maximize returns while preserving capital; (ii) provide returns sufficient to meet the current and long-term obligations of the plan as the obligations become due; and (iii) maintain a diversified portfolio of assets so as to reduce the risk associated with having a disproportionate amount of the plans' total assets invested in any one type of asset, issuer or geography. None of our pension plans hold Jacobs common stock directly (although some plans may hold shares indirectly through investments in mutual funds). The plans' weighted average asset allocations at September 30, 2011 and October 1, 2010 (the measurement dates used in valuing the plans' assets and liabilities) were as follows:

 

                                 
     U.S. Pension Plans     Non-U.S. Pension Pans  
     2011     2010     2011     2010  

Equity securities

      68 %      70 %      41 %      39 % 

Debt securities

      23 %      22 %      37 %      37 % 

Real estate investments

      2 %      3 %      6 %      6 % 

Other

      7 %      5 %      16 %      18 % 

 

The following table presents the fair value of the Company's U.S. pension plan assets at September 30, 2011 segregated by level of fair value measurement inputs within the fair value hierarchy promulgated by U.S. GAAP (refer to Note 2—Significant Accounting Policies, above) (in thousands):

 

                         
     Fair Value, Determined Using Fair Value Measurement Inputs  
     Level 1      Level 3      Total  

U.S. Domestic equities

    $ 172,986       $ —         $ 172,986   

Overseas equities

      22,057         —           22,057   

U.S. Domestic bonds

      66,333         —           66,333   

Cash and equivalents

      4,203         —           4,203   

Real estate

      —           5,353         5,353   

Hedge funds

      —           14,845         14,845   
    

 

 

     

 

 

     

 

 

  

Total

    $ 265,579       $ 20,198       $ 285,777   
    

 

 

     

 

 

     

 

 

  

The following table presents the fair value of the Company's Non-U.S. pension plan assets at September 30, 2011 segregated by level of fair value measurement inputs within the fair value hierarchy promulgated by U.S. GAAP (refer to Note 2—Significant Accounting Policies, above) (in thousands):

 

                         
     Fair Value, Determined Using Fair Value Measurement Inputs  
     Level 1      Level 3      Total  

U.S. Domestic equities

    $ 156,264       $ —         $ 156,264   

Overseas equities

      149,926         —           149,926   

U.S. Domestic bonds

      262,377         —           262,377   

Overseas bonds

      13,794         —           13,794   

Cash and equivalents

      14,486         —           14,486   

Infrastructure / Raw goods

      —           4,776         4,776   

Real estate

      —           43,997         43,997   

Insurance contracts

      —           17,293         17,293   

Hedge funds

      —           81,776         81,776   
    

 

 

     

 

 

     

 

 

  

Total

    $ 596,847       $ 147,842       $ 744,689   
    

 

 

     

 

 

     

 

 

  

The following table presents the fair value of the Company's U.S. pension plan assets at October 1, 2010 segregated by level of fair value measurement inputs within the fair value hierarchy promulgated by U.S. GAAP (refer to Note 2—Significant Accounting Policies, above) (in thousands):

 

                         
     Fair Value, Determined Using Fair Value Measurement Inputs  
     Level 1      Level 3      Total  

U.S. Domestic equities

    $ 64,520       $ —         $ 64,520   

Overseas equities

      10,526         —           10,526   

U.S. Domestic bonds

      2,935         —           2,935   

Overseas bonds

      20,452         —           20,452   

Cash and equivalents

      703         —           703   

Real estate

      —           3,164         3,164   

Hedge funds

      —           5,491         5,491   
    

 

 

     

 

 

     

 

 

  

Total

    $ 99,136       $ 8,655       $ 107,791   
    

 

 

     

 

 

     

 

 

  

 

The following table presents the fair value of the Company's Non-U.S. pension plan assets at October 1, 2010 segregated by level of fair value measurement inputs within the fair value hierarchy promulgated by U.S. GAAP (refer to Note 2—Significant Accounting Policies, above) (in thousands):

 

                         
     Fair Value, Determined Using Fair Value Measurement Inputs  
     Level 1      Level 3      Total  

U.S. Domestic equities

    $ 135,060       $ —         $ 135,060   

Overseas equities

      118,145         —           118,145   

U.S. Domestic bonds

      241,251         —           241,251   

Overseas bonds

      1,376         —           1,376   

Cash and equivalents

      15,486         —           15,486   

"With Profits" funds

      —           1,482         1,482   

Real estate

      —           38,351         38,351   

Insurance contracts

      —           27,465         27,465   

Hedge funds

      —           83,209         83,209   
    

 

 

     

 

 

     

 

 

  

Total

    $ 511,318       $ 150,507       $ 661,825   
    

 

 

     

 

 

     

 

 

  

The following table summarizes the changes in the fair value of the Company's U.S. Plans' Level 3 assets for the year ended September 30, 2011 (in thousands):

 

                 
     Real
Estate		     Hedge
Funds		  

Balance, beginning of year

    $ 3,164      $ 5,491   

Transfers

      4,661        9,208   

Realized and unrealized gains (losses)

      (2,472 )      146   
    

 

 

    

 

 

  

Balance, end of year

    $ 5,353     $ 14,845  
    

 

 

    

 

 

  

The following table summarizes the changes in the fair value of the Company's Non-U.S. Plans' Level 3 assets for the year ended September 30, 2011 (in thousands):

 

                                         
     Infrastructure
/ Raw Goods		      Real
Estate		     Insurance
Contracts		     Hedge
Funds		     "With Profits"
Funds		  

Balance, beginning of year

    $ —         $ 38,351      $ 27,465      $ 83,209      $ 1,482   

Purchases, sales, and settlements

      4,776         2,248        323        (1,452 )      —     

Realized and unrealized gains

      —           3,799        593        937        —     

Transfers

      —           —          (10,964 )      —          (1,513 ) 

Effect of exchange rate changes

      —           (401 )      (124 )      (918 )      31   
    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Balance, end of year

    $ 4,776      $ 43,997     $ 17,293     $ 81,776     $ —     
    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

The following table summarizes the changes in the fair value of the Company's U.S. Plans' Level 3 assets for the year ended October 1, 2010 (in thousands):

 

                 
     Real
Estate		     Hedge
Funds		  

Balance, beginning of year

    $ 3,387      $ 5,505   

Realized and unrealized losses

      (223 )      (14 ) 
    

 

 

    

 

 

  

Balance, end of year

    $ 3,164     $ 5,491  
    

 

 

    

 

 

  

 

The following table summarizes the changes in the fair value of the Company's Non-U.S. Plans' Level 3 assets for the year ended October 1, 2010 (in thousands):

 

                                 
     "With Profits"
Funds		     Real
Estate		     Insurance
Contracts		     Hedge
Funds		  

Balance, beginning of year

    $ 1,557      $ 31,047      $ 25,706      $ 52,323   

Purchases, sales, and settlements

      —          3,247        —          20,546   

Realized and unrealized gains

      (55 )      4,661        2,888        10,699   

Transfers

      —          (5 )      —          —     

Effect of exchange rate changes

      (20 )      (599 )      (1,129 )      (359 ) 
    

 

 

    

 

 

    

 

 

    

 

 

  

Balance, end of year

    $ 1,482     $ 38,351     $ 27,465     $ 83,209  
    

 

 

    

 

 

    

 

 

    

 

 

  

The following table presents the amount of cash contributions we anticipate making into the plans during fiscal 2012 (in thousands):

 

                 
     U.S.
Pension Plans		      Non-U.S.
Pension  Pans		  

Anticipated cash contributions

    $ 60,974       $ 48,345   

The following table presents the total benefit payments expected to be paid to pension plan participants during each of the next five fiscal years, and in total for the five years thereafter (in thousands):

 

                 
     U.S. Pension Plans      Non-U.S.
Pension  Pans		  

2012

    $ 74,472       $ 33,946   

2013

      35,503         36,379   

2014

      38,211         37,602   

2015

      29,728         40,738   

2016

      36,150         46,146   

For the period 2017 through 2021

      210,743         286,879   

The following table presents the components of net periodic pension cost for the Company's U.S. plans recognized in the accompanying Consolidated Statements of Earnings for each of the last three fiscal years (in thousands):

 

                         
     2011     2010     2009  

Service cost

    $ 10,684      $ —        $ —     

Interest cost

      21,377        7,545        8,147   

Expected return on plan assets

      (23,558 )      (10,566 )      (9,208 ) 

Actuarial loss

      7,025        1,846        1,038   

Prior service cost

      (103 )      —          —     
    

 

 

    

 

 

    

 

 

  

Net pension cost, before special items

      15,425        (1,175 )      (23 ) 

Special termination benefits

      120        —          —     
    

 

 

    

 

 

    

 

 

  

Total net periodic pension cost recognized

    $ 15,545      $ (1,175 )    $ (23 ) 
    

 

 

    

 

 

    

 

 

  

 

The following table presents the components of net periodic pension cost for the Company's Non-U.S. plans recognized in the accompanying Consolidated Statements of Earnings for each of the last three fiscal years (in thousands):

 

                         
     2011     2010     2009  

Service cost

    $ 30,816      $ 22,722      $ 19,212   

Interest cost

      54,631        46,584        41,634   

Expected return on plan assets

      (50,033 )      (36,988 )      (35,629 ) 

Actuarial loss

      13,535        10,488        4,078   

Prior service cost

      303        293        293   
    

 

 

    

 

 

    

 

 

  

Net pension cost, before special items

      49,252        43,099        29,588   

Special termination benefits

      —          —          203   

Curtailments and settlements

      381        1,206        —     
    

 

 

    

 

 

    

 

 

  

Total net periodic pension cost recognized

    $ 49,633      $ 44,305      $ 29,791   
    

 

 

    

 

 

    

 

 

  

Multiemployer Plans

In the United States and Canada, we contribute to various trusteed pension plans covering hourly construction employees under industry-wide agreements. We also contribute to various trusteed plans in certain countries in Europe covering both hourly and certain salaried employees. Contributions are based on the hours worked by employees covered under these agreements and are charged to direct costs of contracts on a current basis. Information from the plans' administrators is not available to permit us to determine our share of unfunded benefits, if any. The following table presents the Company's contributions to these multiemployer plans during fiscal 2011, 2010, and 2009 (in thousands):

 

                         
     2011      2010      2009  

Contributions to multiemployer pension plans

    $ 98,270       $ 65,382       $ 51,958