Pension and Other Postretirement Benefit 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 where applicable, allowing for projected compensation increases using the projected unit method.

The accounting for pension and other post-retirement benefit plans requires the use of assumptions and estimates in order to calculate periodic benefit cost and the value of the plans’ assets and benefit obligations. These assumptions include discount rates, investment returns, and projected salary increases, amongt others. The discount rates used in valuing the plans' benefit obligations were determined with reference to high quality corporate and government bonds that are appropriately matched to the duration of each plan's obligations. The expected long-term rate of return on plan assets is generally based on using country-specific simulation models which select a single outcome for expected return based on the target asset allocation. The expected long-term-rates of return used in the valuation are the annual average returns generated by these assumptions over a 20 year period for each asset class based on the expected long-term rate of return of the underlying assets.

The following table sets forth the changes in the plans’ combined net benefit obligation (segregated between plans existing within and outside the U.S.) during each of the fiscal years presented (in thousands):



	U.S. Pension Plans						Non-U.S. Pension Plans
	2015			2014			2015			2014
Net benefit obligation at the beginning of the year	$	495,788		$	468,439		$	1,196,520		$	1,307,331
Service cost	12,045			12,077			21,374			25,374
Interest cost	20,629			22,041			44,659			54,208
Participants’ contributions	2,743			3,095			4,402			9,082
Actuarial losses	42,749			27,076			30,238			105,838
Benefits paid	(40,289		)	(35,634		)	(35,662		)	(33,387		)
Curtailments and settlements	—			—			(5,763		)	(269,580		)
Plan amendments	—			(1,306		)	(1,612		)	—
Effect of exchange rate changes	—			—			(98,564		)	(2,346		)
Net benefit obligation at the end of the year	$	533,665		$	495,788		$	1,155,592		$	1,196,520

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.) during each of the fiscal years presented (in thousands):



	U.S. Pension Plans						Non-U.S. Pension Plans
	2015			2014			2015			2014
Fair Value of plan assets at the beginning of the year	$	415,350		$	390,777		$	876,171		$	982,479
Actual return on plan assets	(1,754		)	45,484			86,411			130,665
Employer contributions	3,857			11,628			39,326			57,977
Participants’ contributions	2,743			3,095			4,402			9,082
Gross benefits paid	(40,289		)	(35,634		)	(35,662		)	(33,387		)
Curtailments/settlements	—			—			(1,646		)	(268,486		)
Effect of exchange rate changes	—			—			(72,704		)	(2,159		)
Fair Value of plan assets at the end of the year	$	379,907		$	415,350		$	896,298		$	876,171

The following table reconciles the combined funded statuses of the plans recognized in the accompanying Consolidated Balance Sheets at October 2, 2015, and September 26, 2014 (segregated between plans existing within and outside the U.S.) (in thousands):



	U.S. Pension Plans				Non-U.S. Pension Plans
	2015		2014		2015		2014
Net benefit obligation at the end of the year	$	533,665	$	495,788	$	1,155,592	$	1,196,520
Fair Value of plan assets at the end of the year	379,907		415,350		896,298		876,171
Under-funded amount recognized at the end of the year	$	153,758	$	80,438	$	259,294	$	320,349

The following table presents the accumulated benefit obligation at October 2, 2015, and September 26, 2014 (segregated between plans existing within and outside the U.S.) (in thousands):



	U.S. Pension Plans				Non-U.S. Pension Plans
	2015		2014		2015		2014
Accumulated benefit obligation at the end of the year	$	488,024	$	455,245	$	1,113,016	$	1,128,715

The following table presents the amounts recognized in the accompanying Consolidated Balance Sheets at October 2, 2015 and September 26, 2014 (segregated between plans existing within and outside the U.S.) (in thousands):



	U.S. Pension Plans				Non-U.S. Pension Plans
	2015		2014		2015		2014
Prepaid benefit cost included in prepaid assets	$	—	$	—	$	4,054	$	7,123
Accrued benefit cost included in current liabilities	—		—		381		1,447
Accrued benefit cost included in noncurrent liabilities	153,758		80,438		262,967		326,025
Net amount recognized at the end of the year	$	153,758	$	80,438	$	259,294	$	320,349

Included in the tables are amounts relating to a U.S. pension plan, the participating employees in which are assigned to, and work exclusively on, a specific operating contract with the U.S. federal government. It is the intention of the parties to this contract that the cost of this pension plan will be fully reimbursed by the U.S. federal government pursuant to applicable cost accounting standards. Accordingly, included in “Miscellaneous Noncurrent Assets” in the accompanying Consolidated Balance Sheet at October 2, 2015 is a receivable from the U.S. federal government of approximately $115.5 million ($61.1 million at September 26, 2014) representing the underfunded amount for this pension plan.

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



	2015		2014		2013
Weighted average discount rates	3.9% to 4.0%		3.9% to 4.4%		4.4% to 5.0%
Rates of compensation increases	3.00	%	2.95	%	2.80	%
Expected long-term rates of return on plan assets	7.4	%	7.7	%	7.7	%

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



	2015	2014	2013
Weighted average discount rates	1.6% to 7.8%	1.8% to 8.8%	0.4% to 9.3%
Rates of compensation increases	2.4% to 7.5%	2.6% to 7.5%	2.5% to 7.5%
Expected long-term rates of return on plan assets	3.5% to 8.5%	4.5% to 8.5%	0.4% to 8.5%

The following table presents certain amounts relating to our U.S. pension plans recognized in accumulated other comprehensive loss at October 2, 2015, September 26, 2014 and September 27, 2013 (in thousands):



	2015			2014			2013
Arising during the period:
Net actuarial (gain) loss	$	12,237		$	1,378		$	(15,850	)
Reclassification adjustments:
Net actuarial gain	(2,347		)	(2,255		)	(2,674		)
Total	$	9,890		$	(877	)	$	(18,524	)

The following table presents certain amounts relating to our non-U.S. pension plans recognized in accumulated other comprehensive loss at October 2, 2015, September 26, 2014 and September 27, 2013 (in thousands):



	2015			2014			2013
Arising during the period:
Net actuarial loss (gain)	$	(27,165	)	$	48,752		$	27,417
Prior service cost (benefit)	(1,512		)	(1		)	297
Total	(28,677		)	48,751			27,714
Reclassification adjustments:
Net actuarial gain	(14,034		)	(12,914		)	(9,778		)
Prior service cost (benefit)	51			(19		)	41
Total	(13,983		)	(12,933		)	(9,737		)
Total	$	(42,660	)	$	35,818		$	17,977

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 benefit cost at October 2, 2015, and September 26, 2014 (segregated between U.S. and non-U.S. plans) (in thousands):



	U.S. Pension Plans				Non-U.S. Pension Plans
	2015		2014		2015			2014
Net actuarial loss	$	59,458	$	49,569	$	208,929		$	263,913
Prior service cost	—		—		(1,947		)	(487		)
Total	$	59,458	$	49,569	$	206,982		$	263,426

The following table presents the amount of accumulated comprehensive income that will be amortized against earnings as part of our net periodic benefit cost in fiscal 2016 based on 2015 exchange rates (segregated between U.S. and non-U.S. plans) (in thousands):



	U.S. Pension Plans			Non-U.S. Pension Plans
Unrecognized net actuarial loss	$	8,876		$	14,176
Unrecognized prior service cost	(235		)	(245		)
Accumulated comprehensive loss to be recorded against earnings	$	8,641		$	13,931

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 October 2, 2015, and September 26, 2014 (the measurement dates used in valuing the plans’ assets and liabilities) were as follows:



	U.S. Pension Plans				Non-U.S. Pension Plans
	2015		2014		2015		2014
Equity securities	70	%	75	%	25	%	29	%
Debt securities	21	%	21	%	31	%	32	%
Real estate investments	3	%	—	%	7	%	7	%
Other	6	%	4	%	37	%	32	%

The following table presents the Fair Value of the Company’s Domestic U.S. plan assets at October 2, 2015, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):



	Fair Values By Level of Fair Value Measurement Inputs
	Level 1		Level 3		Total
Domestic equities	$	225,362	$	—	$	225,362
Overseas equities	41,414		—		41,414
Domestic bonds	80,804		—		80,804
Cash and equivalents	6,041		—		6,041
Real estate	—		9,914		9,914
Hedge funds	—		16,372		16,372
Total	$	353,621	$	26,286	$	379,907

The following table presents the Fair Value of the Company’s non-U.S. pension plan assets at October 2, 2015, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):



	Fair Values By Level of Fair Value Measurement Inputs
	Level 1		Level 3		Total
Domestic equities	$	28,007	$	—	$	28,007
Overseas equities	198,309		—		198,309
Domestic bonds	203,266		—		203,266
Overseas bonds	71,545		—		71,545
Cash and equivalents	39,933		—		39,933
Real estate	—		61,996		61,996
Insurance contracts	—		32,522		32,522
Hedge funds	—		260,720		260,720
Total	$	541,060	$	355,238	$	896,298

The following table presents the Fair Value of the Company’s U.S. pension plan assets at September 26, 2014, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):



	Fair Values By Level of Fair Value Measurement Inputs
	Level 1		Level 3		Total
Domestic equities	$	268,674	$	—	$	268,674
Overseas equities	40,587		—		40,587
Domestic bonds	85,853		—		85,853
Cash and equivalents	3,932		—		3,932
Hedge funds	—		16,304		16,304
Total	$	399,046	$	16,304	$	415,350

The following table presents the Fair Value of the Company’s Non-U.S. pension plan assets at September 26, 2014, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):



	Fair Values By Level of Fair Value Measurement Inputs
	Level 1		Level 3		Total
Domestic equities	$	33,842	$	—	$	33,842
Overseas equities	218,779		—		218,779
Domestic bonds	198,344		—		198,344
Overseas bonds	76,349		—		76,349
Cash and equivalents	37,487		—		37,487
Real estate	—		59,966		59,966
Insurance contracts	—		37,468		37,468
Hedge funds	—		213,936		213,936
Total	$	564,801	$	311,370	$	876,171

At October 2, 2015 and September 26, 2014, the Company holds no assets in the U.S. or non-U.S. pension plans that use Level 2 fair value measurement inputs.

The following table summarizes the changes in the Fair Value of the Company’s U.S. Pension Plans’ Level 3 assets for the year ended October 2, 2015 (in thousands):



	Real Estate			Hedge Funds
Balance, beginning of year	$	—		$	16,304
Purchases, sales, and settlements	10,616			—
Realized and unrealized gains (losses)	—			68
Transfers	(702		)	—
Balance, end of year	$	9,914		$	16,372

The following table summarizes the changes in the Fair Value of the Company’s non-U.S. Pension Plans’ Level 3 assets for the year ended October 2, 2015 (in thousands):



	Real Estate			Insurance Contracts			Hedge Funds
Balance, beginning of year	$	59,966		$	37,468		$	213,936
Purchases, sales, and settlements	1,271			526			4,760
Realized and unrealized gains	5,390			1,353			54,719
Transfers	—			—			—
Effect of exchange rate changes	(4,631		)	(6,825		)	(12,695		)
Balance, end of year	$	61,996		$	32,522		$	260,720

The following table summarizes the changes in the Fair Value of the Company’s U.S. Pension Plans’ Level 3 assets for the year ended September 26, 2014 (in thousands):



	Real Estate			Hedge Funds
Balance, beginning of year	$	4,411		$	15,511
Sales	(4,411		)	—
Realized and unrealized losses	—			793
Balance, end of year	$	—		$	16,304

The following table summarizes the changes in the Fair Value of the Company’s non-U.S. Pension Plans’ Level 3 assets for the year ended September 26, 2014 (in thousands):



	Infrastructure / Raw Goods			Real Estate			Insurance Contracts			Hedge Funds
Balance, beginning of year	$	7,076		$	57,173		$	21,214		$	246,389
Purchases, sales, and settlements	(8,125		)	(6,022		)	975			4,915
Realized and unrealized gains	1,025			8,341			926			(41,096		)
Transfers	—			—			15,756			—
Effect of exchange rate changes	24			474			(1,403		)	3,728
Balance, end of year	$	—		$	59,966		$	37,468		$	213,936

The following table presents the amount of cash contributions we anticipate making into the plans during fiscal 2016 (in thousands):

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 Plans
2016	$	43,155	$	30,242
2017	47,442		31,632
2018	41,798		33,959
2019	44,240		35,833
2020	44,697		35,869
For the periods 2021 through 2025	216,232		224,452

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



	2015			2014			2013
Service cost	$	12,045		$	12,077		$	13,814
Interest cost	20,629			22,041			18,569
Expected return on plan assets	(29,526		)	(28,495		)	(25,826		)
Actuarial loss	3,756			3,608			8,030
Prior service cost	(239		)	(103		)	(103		)
Net pension cost, before special items	6,665			9,128			14,484
Special termination benefits	—			—			29
Total net periodic pension cost recognized	$	6,665		$	9,128		$	14,513

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



	2015			2014			2013
Service cost	$	21,374		$	25,374		$	30,117
Interest cost	44,659			54,208			51,331
Expected return on plan assets	(53,052		)	(56,394		)	(54,817		)
Actuarial loss	17,398			15,993			13,276
Prior service cost	(96		)	(28		)	(43		)
Net pension cost, before special items	30,283			39,153			39,864
Curtailments and settlements	255			(15,894		)	(383		)
Total net periodic pension cost recognized	$	30,538		$	23,259		$	39,481

Multiemployer Plans

In Canada and the U.S., we contribute to various trusteed pension plans covering hourly construction employees under industry-wide agreements. We also contribute to various trusteed plans in Australia and 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.

The majority of the contributions the Company makes to multiemployer pension plans is outside the U.S. With respect to these multiemployer plans, the Company's liability to fund these plans is generally limited to the contributions we are required to make under collective bargaining agreements.

Based on our review of our multiemployer pension plans under the guidance provided in ASU 2011-09—Compensation-Retirement Benefits-Multiemployer Plans, we have concluded that none of the multiemployer pension plans into which we contribute are individually significant to our Consolidated Financial Statements.

The following table presents the Company’s contributions to these multiemployer plans during each of the last three fiscal years (in thousands):



	2015		2014		2013
Canada	$	42,575	$	56,341	$	72,660
Europe	10,902		12,693		12,930
United States	5,968		4,485		4,366
Total	$	59,445	$	73,519	$	89,956

U.S.
Pension Plans

Non-U.S.
Pension Plans