Pension and Other Postretirement Benefit Plans

Company-Only Sponsored Plans

We sponsor various defined benefit pension and other post retirement 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 varies by country and plan according to applicable local funding requirements and plan-specific funding agreements. In connection with the acquisition of CH2M on December 15, 2017, the Company acquired CH2M’s pension plan assets and liabilities, which are reflected in the amounts disclosed for the year ended September 28, 2018 below.

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, among 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.) for the years ended September 28, 2018 and September 29, 2017 (in thousands):



	U.S. Plans						Non-U.S. Plans
	September 28, 2018			September 29, 2017			September 28, 2018			September 29, 2017
Net benefit obligation at the beginning of the year	$	169,942		$	185,664		$	1,306,807		$	1,363,782
Service cost	4,765			1,000			8,269			7,509
Interest cost	13,778			5,757			49,324			31,205
Participants’ contributions	839			—			451			250
Actuarial (gains)/losses	(30,730		)	(9,922		)	(43,595		)	(142,273		)
Benefits paid	(27,914		)	(14,338		)	(75,711		)	(40,208		)
Curtailments/settlements/plan amendments	(9,434		)	—			(6,136		)	(1,375		)
Acquisition of CH2M Plans	327,156			—			924,233			—
Effect of exchange rate changes and other, net	—			1,781			(14,396		)	87,917
Net benefit obligation at the end of the year	$	448,402		$	169,942		$	2,149,246		$	1,306,807

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 the years ended September 28, 2018 and September 29, 2017 (in thousands):



	U.S. Plans						Non-U.S. Plans
	September 28, 2018			September 29, 2017			September 28, 2018			September 29, 2017
Fair value of plan assets at the beginning of the year	$	147,788		$	142,464		$	1,076,928		$	1,003,911
Actual return on plan assets	9,891			18,662			(19,883		)	16,789
Employer contributions	58,097			1,000			31,556			21,005
Participants’ contributions	839			—			451			250
Gross benefits paid	(27,914		)	(14,338		)	(75,711		)	(40,208		)
Curtailments/settlements/plan amendments	(9,434		)	—			(5,496		)	(228		)
Acquisition of CH2M Plans	211,562			—			869,414			—
Effect of exchange rate changes and other, net	—			—			(9,778		)	75,409
Fair value of plan assets at the end of the year	$	390,829		$	147,788		$	1,867,481		$	1,076,928

During fiscal 2018, the Company incurred combined curtailment and settlement losses on its defined benefit plans of approximately $5.4 million primarily related to its Sverdrup and Ireland pension plans. During fiscal 2017, we curtailed the pension plan in Ireland.

The following table reconciles the combined funded statuses of the plans recognized in the accompanying Consolidated Balance Sheets at September 28, 2018 and September 29, 2017 (segregated between plans existing within and outside the U.S.) (in thousands):



	U.S. Plans				Non-U.S. Plans
	September 28, 2018		September 29, 2017		September 28, 2018		September 29, 2017
Net benefit obligation at the end of the year	$	448,402	$	169,942	$	2,149,246	$	1,306,807
Fair value of plan assets at the end of the year	390,829		147,788		1,867,481		1,076,928
Under funded amount recognized at the end of the year	$	57,573	$	22,154	$	281,765	$	229,879

The following table presents the accumulated benefit obligation at September 28, 2018 and September 29, 2017 (segregated between plans existing within and outside the U.S.) (in thousands):



	U.S. Plans				Non-U.S. Plans
	September 28, 2018		September 29, 2017		September 28, 2018		September 29, 2017
Accumulated benefit obligation at the end of the year	$	447,549	$	169,942	$	2,123,839	$	1,291,600

The following table presents the amounts recognized in the accompanying Consolidated Balance Sheets at September 28, 2018 and September 29, 2017 (segregated between plans existing within and outside the U.S.) (in thousands):



	U.S. Plans				Non-U.S. Plans
	September 28, 2018		September 29, 2017		September 28, 2018		September 29, 2017
Prepaid benefit cost included in noncurrent assets	$	—	$	—	$	19,736	$	3,035
Accrued benefit cost included in current liabilities	2,548		—		3,671		585
Accrued benefit cost included in noncurrent liabilities	55,025		22,154		297,830		232,329
Net amount recognized at the end of the year	$	57,573	$	22,154	$	281,765	$	229,879

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 the years ended September 28, 2018, September 29, 2017 and September 30, 2016:



	For the Years Ended
	September 28, 2018	September 29, 2017		September 30, 2016
Discount rates	3.9% to 4.2%	3.5	%	3.2	%
Rates of compensation increases	3.5%	—	%	—	%
Return on Assets	5.8% to 5.9%	7.5	%	7.4	%

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. plans for the years ended September 28, 2018, September 29, 2017 and September 30, 2016:



	For the Years Ended
	September 28, 2018	September 29, 2017	September 30, 2016
Discount rates	1.3% to 8.1%	1.3% to 7.0%	0.7% to 7.0%
Rates of compensation increases	2.5% to 7.5%	2.5% to 7.5%	2.5% to 7.5%
Expected long-term rates of return on assets	2.9% to 7.5%	3.5% to 8.5%	3.5% to 8.5%

The following table presents certain amounts relating to our U.S. plans recognized in accumulated other comprehensive (gain) loss at September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):



	September 28, 2018			September 29, 2017			September 30, 2016
Arising during the period:
Net actuarial (gain) loss	$	(7,514	)	$	(11,372	)	$	4,337
Reclassification adjustments:
Net actuarial losses	(2,913		)	(2,431		)	(2,312		)
Total	$	(10,427	)	$	(13,803	)	$	2,025

The following table presents certain amounts relating to our non-U.S. plans recognized in accumulated other comprehensive (gain) loss at September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):



	September 28, 2018			September 29, 2017			September 30, 2016
Arising during the period:
Net actuarial (gain) loss	$	59,827		$	(76,860	)	$	102,925
Prior service cost (benefit)	215			119			580
Total	60,042			(76,741		)	103,505
Reclassification adjustments:
Net actuarial losses	(5,507		)	(8,732		)	(7,508		)
Prior service cost	181			229			163
Total	(5,326		)	(8,503		)	(7,345		)
Total	$	54,716		$	(85,244	)	$	96,160

The following table presents certain amounts relating to our plans recorded in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit cost at September 28, 2018 and September 29, 2017 (segregated between U.S. and non-U.S. plans) (in thousands):



	U.S. Plans				Non-U.S. Plans
	September 28, 2018		September 29, 2017		September 28, 2018			September 29, 2017
Net actuarial loss	$	37,255	$	47,681	$	273,312		$	218,752
Prior service cost	—		—		(700		)	(855		)
Total	$	37,255	$	47,681	$	272,612		$	217,897

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 2019 based on 2018 exchange rates (segregated between U.S. and non-U.S. plans) (in thousands):



	U.S. Plans		Non-U.S. Plans
Unrecognized net actuarial loss	$	2,925	$	8,616
Unrecognized prior service cost	—		(258		)
Accumulated comprehensive loss to be recorded against earnings	$	2,925	$	8,358

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 28, 2018 and September 29, 2017 (the measurement dates used in valuing the plans’ assets and liabilities) were as follows:



	U.S. Plans				Non-U.S. Pans
	September 28, 2018		September 29, 2017		September 28, 2018		September 29, 2017
Equity securities	27	%	70	%	24	%	24	%
Debt securities	39	%	23	%	49	%	32	%
Real estate investments	—	%	—	%	8	%	5	%
Other	34	%	7	%	19	%	39	%

The following table presents the Fair Value of the Company’s Domestic U.S. plan assets at September 28, 2018, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):



	September 28, 2018
	Fair Value, Determined Using Fair Value Measurement Inputs
	Level 1		Level 2		Level 3		Investments measured at Net Asset Value		Total
U.S. Domestic equities	$	13,861	$	63,937	$	—	$	—	$	77,798
Overseas equities	26,699		—		—		—		26,699
U.S. Domestic bonds	84,894		58,229		—		—		143,123
Overseas bonds	938		9,570		—		—		10,508
Cash and equivalents	6,631		—		—		—		6,631
Mutual funds	126,042		—		—		—		126,042
Hedge funds	$	—	$	—	$	—	28		28
Total	$	259,065	$	131,736	$	—	$	28	$	390,829

The following table presents the Fair Value of the Company’s non-U.S. plan assets at September 28, 2018, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):



	September 28, 2018
	Fair Value, Determined Using Fair Value Measurement Inputs
	Level 1		Level 2			Level 3		Investments measured at Net Asset Value		Total
Domestic equities	$	—	31,868			$	—	36,642		$	68,510
Overseas equities	—		327,309			—		44,675		371,984
Domestic bonds	252		222,282			—		1,080		223,614
Overseas bonds	—		641,966			—		60,804		702,770
Cash and equivalents	33,482		7,822			—		—		41,304
Real estate	—		26,987			99,587		17,568		144,142
Insurance contracts	—		4,188			95,782		—		99,970
Derivatives	—		(26,656		)	—		—		$	(26,656	)
Hedge funds	—		—			135,786		8,047		$	143,833
Mutual funds	69		97,941					—		98,010
Total	$	33,803	$	1,333,707		$	331,155	$	168,816	$	1,867,481

The following table presents the Fair Value of the Company’s U.S. plan assets at September 29, 2017, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):



	September 29, 2017
	Fair Value, Determined Using Fair Value Measurement Inputs
	Level 1		Level 3		Total
U.S. Domestic equities	$	103,760	$	—	$	103,760
U.S. Domestic bonds	33,404		—		33,404
Cash and equivalents	4,448		—		4,448
Hedge funds	—		6,176		6,176
Total	$	141,612	$	6,176	$	147,788

The following table presents the Fair Value of the Company’s non-U.S. plan assets at September 29, 2017, segregated by level of Fair Value measurement inputs within the Fair Value hierarchy promulgated by U.S. GAAP (in thousands):



	September 29, 2017
	Fair Value, Determined Using Fair Value Measurement Inputs
	Level 1		Level 3		Total
Domestic equities	$	30,916	$	—	$	30,916
Overseas equities	229,205		—		229,205
Domestic bonds	263,145		—		263,145
Overseas bonds	77,682		—		77,682
Cash and equivalents	38,924		—		38,924
Real estate	—		58,974		58,974
Insurance contracts	—		74,353		74,353
Other	—		303,729		303,729
Total	$	639,872	$	437,056	$	1,076,928

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 28, 2018 (in thousands):



	Hedge Funds
Balance at September 29, 2017	$	6,176
Purchases, sales, and settlements	(6,176		)
Realized and unrealized gains	—
Balance at September 28, 2018	$	—

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 28, 2018 (in thousands):



	Real Estate			Insurance Contracts			Hedge Funds
Balance at September 29, 2017	$	58,974		$	74,353		$	303,729
Purchases, sales, and settlements	42,711			21,626			(154,446		)
Realized and unrealized gains (losses)	(784		)	1,551			(6,650		)
Transfers	—			—			—
Effect of exchange rate changes	(1,314		)	(1,748		)	(6,847		)
Balance at September 28, 2018	$	99,587		$	95,782		$	135,786

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 29, 2017 (in thousands):



	Real Estate			Hedge Funds
Balance at September 30, 2016	$	3,477		$	5,715
Purchases	(3,477		)	(557		)
Realized and unrealized gains	—			1,018
Balance at September 29, 2017	$	—		$	6,176

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 29, 2017 (in thousands):



	Real Estate			Insurance Contracts			Hedge Funds
Balance at September 30, 2016	$	55,665		$	39,473		$	272,517
Purchases, sales, and settlements	(1,199		)	422			(9,022		)
Realized and unrealized gains	2,642			(7,572		)	19,662
Transfers	—			40,031			11,758
Effect of exchange rate changes	1,866			1,999			8,814
Balance at September 29, 2017	$	58,974		$	74,353		$	303,729

The following table presents the amount of cash contributions we anticipate making into the plans during fiscal 2019 (in thousands):



	U.S. Plans		Non-U.S. Plans
Anticipated cash contributions	$	2,601	$	31,549

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



	U.S. Plans		Non-U.S. Pans
2019	$	31,785	$	70,313
2020	31,270		71,337
2021	31,740		74,906
2022	31,818		78,097
2023	31,857		81,569
For the periods 2024 through 2028	154,755		448,246

The following table presents the components of net periodic benefit cost for the Company’s U.S. plans recognized in the accompanying Consolidated Statements of Earnings for the years ended September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):



	September 28, 2018			September 29, 2017			September 30, 2016
Service cost	$	4,765		$	1,000		$	9,875
Interest cost	13,778			5,757			16,746
Expected return on plan assets	(19,663		)	(9,942		)	(22,368		)
Actuarial loss	3,845			3,985			7,512
Prior service cost	—			—			(176		)
Net pension cost, before special items	2,725			800			11,589
Contractual expense/Settlement loss	4,146			1,781			8,061
Total net periodic pension cost recognized	$	6,871		$	2,581		$	19,650

The following table presents the components of net periodic benefit cost for the Company’s Non-U.S. plans recognized in the accompanying Consolidated Statements of Earnings for the years ended September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):



	September 28, 2018			September 29, 2017			September 30, 2016
Service cost	$	8,269		$	7,509		$	14,378
Interest cost	49,324			31,205			38,892
Expected return on plan assets	(83,328		)	(56,269		)	(50,190		)
Actuarial loss	6,655			10,616			9,092
Prior service cost	(257		)	(329		)	(260		)
Net pension cost, before special items	(19,337		)	(7,268		)	11,912
Curtailment expense/Settlement loss	1,268			(298		)	(7,512		)
Total net periodic pension (income) cost recognized	$	(18,069	)	$	(7,566	)	$	4,400

During fiscal 2018, the Company incurred combined curtailment and settlement losses on its defined benefit plans primarily related to its Sverdrup and Ireland pension plans. During fiscal 2017, we curtailed the pension plan in Ireland. The fiscal 2016 settlement loss included in the U.S. pension plan net periodic benefit cost table above related to the transfer of a U.S. pension plan to a new service provider. The fiscal 2016 settlement loss included in the Non-U.S. pension plan net periodic benefit cost table above related to the sale of the Company’s French subsidiary.

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 are 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 for the years ended September 28, 2018, September 29, 2017 and September 30, 2016 (in thousands):



	September 28, 2018		September 29, 2017		September 30, 2016
Canada	$	36,354	$	35,182	$	44,912
Europe	$	10,677	$	6,212	$	8,771
United States	$	9,536	$	4,548	$	5,058
Contributions to multiemployer pension plans	$	56,567	$	45,942	$	58,741

Other Benefit Plans

During the second fiscal quarter of 2017, the Company restructured certain employee welfare trust plans benefiting certain of its employees within its India operations by moving these plans under the legal ownership and operation of the Company’s legal entity structure in the region. Historically, the Company structured these plans as separate, stand-alone entities outside of the Company’s consolidated legal entity framework. As a result of these changes, the Company has recorded a one-time, non-cash benefit of $9.9 million reported in selling, general and administrative expense in its Consolidated Statement of Earnings for the year ended September 29, 2017, with corresponding assets in the plans associated with restricted investments of $7.7 million and employee loans receivable of $2.2 million and both recorded in Total other non-current assets in our Consolidated Balance Sheet at September 29, 2017.