PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS

We have funded and unfunded defined benefit pension plans which provide defined benefits based on years of service and final average salary. In October 2009, the Board of Directors amended the U.S. Qualified and Non-Qualified Defined Benefit Pension Plans (“U.S. Pension Plans”) to freeze participation in the U.S. Pension Plans for all new nonunion employees hired on or after January 1, 2010, and current nonunion employees with less than five years of vesting service as of December 31, 2009. For current nonunion employees with less than five years of vesting service as of December 31, 2009, benefits accrued under the U.S. Pension Plans and earned as of that date were frozen based on credited service and pay as of December 31, 2009.

Foreign-based employees are eligible to participate in FMC Technologies-sponsored or government-sponsored benefit plans to which we contribute. Several of the foreign defined benefit pension plans sponsored by us provide for employee contributions; the remaining plans are noncontributory.

We have other post-retirement benefit plans covering substantially all of our U.S. employees who were hired prior to January 1, 2003. The post-retirement health care plans are contributory; the post-retirement life insurance plans are noncontributory.

We are required to recognize the funded status of defined benefit post-retirement plans as an asset or liability in the consolidated balance sheet and recognize changes in that funded status in comprehensive income in the year in which the changes occur. Further, we are required to measure the plan’s assets and its obligations that determine its funded status as of the date of the consolidated balance sheet. We have applied this guidance to our domestic pension and other post-retirement benefit plans as well as for many of our non-U.S. plans, including those in the United Kingdom, Norway, Germany, France and Canada. Pension expense measured in compliance with GAAP for the other non-U.S. pension plans is not materially different from the locally reported pension expense.

The funded status of our U.S. Pension Plans, certain foreign pension plans and U.S. post-retirement health care and life insurance benefit plans, together with the associated balances recognized in our consolidated financial statements as of December 31, 2012 and 2011, were as follows:



	Pensions													Other Post-retirement Benefits
	2012						2011							2012			2011
(In millions)	U.S.			Int’l			U.S.				Int’l
Accumulated benefit obligation	$	614.1		$	290.4		$	536.6			$	326.1
Projected benefit obligation at January 1	$	597.8		$	454.5		$	486.9			$	388.5		$	8.8		$	8.6
Service cost	14.6			37.2			12.0				29.5			0.1			0.1
Interest cost	26.9			21.4			26.1				20.3			0.4			0.4
Actuarial (gain) loss	86.5			(1.8		)	88.6				32.0			—			0.4
Amendments	—			—			0.9				—			—			—
Curtailments	—			(49.0		)	—				—			—			—
Settlements	—			(108.6		)	—				—			—			—
Foreign currency exchange rate changes	—			25.9			—				(8.4		)	—			—
Plan participants’ contributions	—			2.0			—				1.6			—			—
Benefits paid	(32.9		)	(9.3		)	(16.7		)		(9.0		)	(0.6		)	(0.7		)
Projected benefit obligation at December 31	692.9			372.3			597.8				454.5			8.7			8.8
Fair value of plan assets at January 1	406.0			362.1			380.5				321.9			—			—
Actual return on plan assets	57.5			30.6			(10.6		)		(6.0		)	—			—
Company contributions	31.9			30.8			52.8				61.3			0.6			0.7
Foreign currency exchange rate changes	—			20.3			—				(7.7		)	—			—
Settlements	—			(108.6		)	—			—	—			—			—
Plan participants’ contributions	—			2.0			—				1.6			—			—
Benefits paid	(32.9		)	(9.3		)	(16.7		)		(9.0		)	(0.6		)	(0.7		)
Fair value of plan assets at December 31	462.5			327.9			406.0				362.1			—			—
Funded status of the plans (liability) at December 31	$	(230.4	)	$	(44.4	)	$	(191.8	)		$	(92.4	)	$	(8.7	)	$	(8.8	)
Other assets	—			3.9			—				—			—			—
Current portion of accrued pension and other post-retirement benefits	(19.1		)	(1.1		)	(18.8		)		(1.0		)	(0.7		)	(0.8		)
Accrued pension and other post-retirement benefits, net of current portion	(211.3		)	(47.2		)	(173.0		)		(91.4		)	(8.0		)	(8.0		)
Funded status recognized in the consolidated balance sheets at December 31	$	(230.4	)	$	(44.4	)	$	(191.8	)		$	(92.4	)	$	(8.7	)	$	(8.8	)
Amounts recognized in accumulated other comprehensive (income) loss:
Unrecognized actuarial (gain) loss	$	355.0		$	103.3		$	315.6			$	173.8		$	(1.7	)	$	(1.9	)
Unrecognized prior service (credit) cost	0.1			1.0			—				1.0			(0.5		)	(1.6		)
Unrecognized transition asset	—			(0.5		)	—				(0.8		)	—			—
Accumulated other comprehensive (income) loss at December 31	$	355.1		$	103.8		$	315.6			$	174.0		$	(2.2	)	$	(3.5	)
Plans with underfunded or non-funded projected benefit obligation:
Aggregate projected benefit obligation	$	692.9		$	285.1		$	597.8			$	454.5		$	8.7		$	8.8
Aggregate fair value of plan assets	462.5			236.9			406.0				362.2			—			—
Plans with underfunded or non-funded accumulated benefit obligation:
Aggregate accumulated benefit obligation	$	614.1		$	31.3		$	536.6			$	21.9
Aggregate fair value of plan assets	462.5			9.3			406.0				6.5

The following table summarizes the components of net periodic benefit cost for the years ended December 31, 2012, 2011 and 2010:



	Pensions																		Other Post-retirement Benefits
	2012						2011						2010						2012			2011			2010
(In millions)	U.S.			Int’l			U.S.			Int’l			U.S.			Int’l
Components of net annual benefit cost:
Service cost	$	14.6		$	37.2		$	12.0		$	29.5		$	11.1		$	24.9		$	0.1		$	0.1		$	0.1
Interest cost	26.9			21.4			26.1			20.3			25.2			17.9			0.4			0.4			0.5
Expected return on plan assets	(39.9		)	(26.4		)	(38.2		)	(24.5		)	(32.7		)	(21.9		)	—			—			—
Settlement cost	5.6			8.5			8.9			—			—			—			—			—			—
Amortization of transition asset	—			(0.2		)	—			(0.5		)	—			(0.5		)	—			—			—
Amortization of prior service cost (credit)	(0.1		)	0.1			(0.1		)	0.1			(0.1		)	—			(1.1		)	(1.3		)	(1.2		)
Amortization of net actuarial loss (gain)	23.9			8.1			12.9			5.0			8.7			3.1			(0.2		)	(0.2		)	(0.3		)
Net periodic benefit cost (income)	$	31.0		$	48.7		$	21.6		$	29.9		$	12.2		$	23.5		$	(0.8	)	$	(1.0	)	$	(0.9	)
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial loss (gain) arising during period	$	68.9		$	(53.8	)	$	137.3		$	61.9		$	36.9		$	27.5		$	—		$	0.5		$	0.9
Amortization of net actuarial gain (loss)	(23.9		)	(8.0		)	(21.8		)	(5.0		)	(8.7		)	(3.1		)	0.2			0.2			0.3
Settlements	(5.6		)	(8.5		)	—			—			—			—			—			—			—
Prior service cost arising during period	—			—			0.9			—			—			0.9			—			—			—
Amortization of prior service credit (cost)	0.1			(0.1		)	0.1			(0.1		)	0.1			—			1.1			1.3			1.2
Amortization of transition asset	—			0.2			—			0.5			—			0.5			—			—			—
Total recognized in other comprehensive loss (income)	$	39.5		$	(70.2	)	$	116.5		$	57.3		$	28.3		$	25.8		$	1.3		$	2.0		$	2.4

Included in accumulated other comprehensive income at December 31, 2012, are noncash, pretax charges which have not yet been recognized in net periodic benefit cost (income). The estimated amounts that will be amortized from the portion of each component of accumulated other comprehensive income as a component of net period benefit cost (income), during the next fiscal year are as follows:



	Pensions						Other Post-retirement Benefits
(In millions)	U.S.			Int’l
Net actuarial losses (gains)	$	27.2		$	5.5		$	(0.1	)
Prior service cost (credit)	$	(0.1	)	$	0.1		$	(0.5	)
Transition asset	$	—		$	(0.1	)	$	—

Key assumptions—The following weighted-average assumptions were used to determine the benefit obligations:



	Pensions								Other Post-retirement Benefits
	2012				2011				2012		2011
	U.S.		Int’l		U.S.		Int’l
Discount rate	3.90	%	4.46	%	4.60	%	4.54	%	3.90	%	4.60	%
Rate of compensation increase	4.00	%	3.97	%	4.00	%	4.05	%	—		—

The following weighted-average assumptions were used to determine net periodic benefit cost:



	Pensions												Other Post-retirement Benefits
	2012				2011				2010				2012		2011		2010
	U.S.		Int’l		U.S.		Int’l		U.S.		Int’l
Discount rate	4.60	%	4.54	%	5.39	%	5.00	%	5.90	%	5.57	%	4.60	%	5.40	%	5.90	%
Rate of compensation increase	4.00	%	4.05	%	4.00	%	4.20	%	4.00	%	4.18	%	—		—		—
Expected rate of return on plan assets	9.00	%	7.62	%	9.00	%	6.98	%	9.00	%	7.48	%	—		—		—

Our estimate of expected rate of return on plan assets is primarily based on the historical performance of plan assets, current market conditions, our asset allocation and long-term growth expectations.

Plan assets—Our pension investment strategy emphasizes maximizing returns consistent with minimizing risk. Excluding our international plans with insurance-based investments, 88% of our total pension assets represent the U.S. qualified plan, the U.K. plan and Canadian plan. These plans are primarily invested in equities to maximize the long-term returns of the plans. The investment managers of these assets, including the hedge funds and limited partnerships, use Graham and Dodd fundamental investment analysis to select securities that have a margin of safety between the price of the security and the estimated value of the security. This value-oriented approach tends to mitigate the risk of a large equity allocation.

The following is a description of the valuation methodologies used for the pension plan assets. There have been no changes in the methodologies used at December 31, 2012 and 2011.


•	Cash is valued at cost, which approximates fair value.


•	Equity securities are comprised of common stock, preferred stock and registered investment companies. The fair values of equity securities are valued at the closing price reported on the active market on which the securities are traded. The fair values of registered investment companies are valued based on quoted market prices, which represent the net asset value (“NAV”) of shares held.


•	The fair values of hedge funds are valued using the NAV as determined by the administrator or custodian of the fund.


•	The fair values of limited partnerships are valued using the NAV as determined by the administrator or custodian of the fund.


•	Insurance contracts are valued at book value, which approximates fair value, and is calculated using the prior-year balance plus or minus investment returns and changes in cash flows.


•	Emerging market bonds are valued at the closing price reported on the active market on which the bonds are traded.

Our pension plan assets measured at fair value are as follows at December 31, 2012 and 2011. Please refer to “Fair Value” in Note 1 to these consolidated financial statements for a description of the levels.



	U.S.								International
December 31, 2012 (In millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Cash	$	35.7	$	35.7	$	—	$	—	$	1.0	$	1.0	$	—	$	—
Equity securities:
U.S. companies:
Large cap	127.0		127.0		—		—		47.2		47.2		—		—
Mid cap	9.4		9.4		—		—		0.1		0.1		—		—
Small cap	73.7		73.7		—		—		—		—		—		—
International companies	116.4		116.4		—		—		182.3		182.3		—		—
Hedge funds	55.6		—		—		55.6		—		—		—		—
Limited partnerships	40.1		—		—		40.1		—		—		—		—
Insurance contracts	—		—		—		—		97.3		—		97.3		—
Emerging market bonds	4.6		4.6		—		—		—		—		—		—
Total assets	$	462.5	$	366.8	$	—	$	95.7	$	327.9	$	230.6	$	97.3	$	—
December 31, 2011 (In millions)
Cash	$	36.1	$	36.1	$	—	$	—	$	0.9	$	0.9	$	—	$	—
Equity securities:
U.S. companies:
Large cap	109.6		109.6		—		—		43.6		43.6		—		—
Mid cap	8.8		8.8		—		—		—		—		—		—
Small cap	62.8		62.8		—		—		—		—		—		—
International companies	99.0		99.0		—		—		148.0		148.0		—		—
Hedge funds (1)	49.0		—		—		49.0		—		—		—		—
Limited partnerships (1)	37.1		—		—		37.1		—		—		—		—
Insurance contracts	—		—		—		—		169.6		—		169.6		—
Emerging market bonds	3.6		3.6		—		—		—		—		—		—
Total assets	$	406.0	$	319.9	$	—	$	86.1	$	362.1	$	192.5	$	169.6	$	—

______________________________

(1)

Certain prior-year amounts have been reclassified to conform to the current year’s presentation. We have reclassified a plan asset from hedge funds to limited partnerships within the Level 3 classification. This reclassification increased the 2011 limited partnership balance by $4.3 million. This change only impacted the presentation of information in the above table within the Level 3 classification and did not impact our financial position or results of operations for 2011.

The summary of changes in the fair value of the pension plan Level 3 assets for the years ended December 31, 2012 and 2011 is as follows:



(In millions)	Level 3 Assets
Balance at December 31, 2010	$	74.4
Unrealized losses relating to instruments still held at the reporting date	(6.3		)
Purchases, sales, and settlements, net	18.0
Balance at December 31, 2011	$	86.1
Realized gains	0.8
Unrealized gains relating to instruments still held at the reporting date	9.7
Purchases, sales, and settlements, net	(0.9		)
Balance at December 31, 2012	$	95.7

Contributions—We expect to contribute approximately $30.6 million to our international pension plans, representing primarily the U.K. and Norway qualified pension plans, and our Non-Qualified Defined Benefit Pension Plan in 2013. Additionally, we may make a discretionary contribution of approximately $19.0 million to our domestic qualified pension plan in 2013. All of the contributions are expected to be in the form of cash. In 2012 and 2011, we contributed $62.7 million and $114.1 million to the pension plans, respectively, which included $13.5 million and $51.0 million, respectively, to the U.S. Qualified Defined Benefit Pension Plan.

Estimated future benefit payments—The following table summarizes expected benefit payments from our various pension and post-retirement benefit plans through 2022. Actual benefit payments may differ from expected benefit payments.



	Pensions				Other Post-retirement Benefits
(In millions)	U.S.		International
2013	$	31.8	$	8.1	$	0.8
2014	30.7		8.5		0.8
2015	26.3		8.3		0.8
2016	28.4		8.4		0.8
2017	41.3		9.5		0.8
2018-2022	178.5		61.5		3.4

Savings plans—The FMC Technologies, Inc. Savings and Investment Plan (“Qualified Plan”), a qualified salary reduction plan under Section 401(k) of the Internal Revenue Code, is a defined contribution plan. Additionally, we have a non-qualified deferred compensation plan, the Non-Qualified Plan, which allows certain highly compensated employees the option to defer the receipt of a portion of their salary. We match a portion of the participants’ deferrals to both plans. In October 2009, the Board of Directors approved amendments to the U.S. Qualified Plan and U.S. Non-Qualified Plan (“Amended Plans”). Under the Amended Plans, we are required to make a nonelective contribution every pay period to all new nonunion employees hired on or after January 1, 2010, and current nonunion employees with less than five years of vesting service as of December 31, 2009. The vesting schedule for the nonelective contribution under the Amended Plans is three years of vesting service with FMC Technologies.

Participants in the Non-Qualified Plan earn a return based on hypothetical investments in the same options as our 401(k) plan, including FMC Technologies stock. Changes in the market value of these participant investments are reflected as an adjustment to the deferred compensation liability with an offset to other income (expense), net. As of December 31, 2012 and 2011, our liability for the Non-Qualified Plan was $34.4 million and $35.1 million, respectively, and was recorded in other non-current liabilities. We hedge the financial impact of changes in the participants’ hypothetical investments by purchasing the investments that the participants have chosen. With the exception of FMC Technologies stock, which is maintained at its cost basis, changes in the fair value of these investments are recognized as an offset to other income (expense), net. As of December 31, 2012 and 2011, we had investments for the Non-Qualified Plan totaling $26.0 million and $26.2 million, respectively, at fair market value and FMC Technologies stock held in trust of $7.8 million and $5.8 million, respectively, at its cost basis.

We recognized expense of $18.4 million, $14.6 million and $11.1 million, for matching contributions to these plans in 2012, 2011 and 2010, respectively. Additionally, we recognized expense of $11.8 million and $8.4 million for nonelective contributions in 2012 and 2011, respectively.