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 (“frozen participants”). 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.

In 2014 the Company amended the U.S. Qualified Pension Plan, and effective June 1, 2014, the assets and liabilities attributable to participants who are (i) either frozen participants or participants that had terminated service and subsequently became re-employed on or after January 1, 2010, and (ii) active employees of FMC Technologies as of June 1, 2014 were transferred from the U.S. Qualified Pension Plan to the FMC Technologies, Inc. Frozen Retirement Plan (“Frozen Plan”). Under the Frozen Plan, participants had the option to accept cash or an annuity upon the Frozen Plan’s termination. In December 2014, settlement payments were made based on frozen participants’ elections and settlement costs were recorded during 2014.

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, 2014 and 2013, were as follows:



	Pensions												Other Post-retirement Benefits
	2014						2013						2014			2013
(In millions)	U.S.			Int’l			U.S.			Int’l
Accumulated benefit obligation	$	552.4		$	406.3		$	513.3		$	360.1
Projected benefit obligation at January 1	$	585.0		$	438.8		$	692.9		$	372.3		$	6.7		$	8.7
Service cost	13.8			16.7			16.5			14.7			0.1			0.1
Interest cost	29.1			18.5			25.8			16.1			0.3			0.2
Actuarial (gain) loss	101.8			71.6			(119.8		)	45.6			4.0			(1.7		)
Amendments	2.4			0.3			—			0.6			(0.1		)	—
Settlements	(63.8		)	—			(11.1		)	—			—			—
Foreign currency exchange rate changes	—			(53.6		)	—			(2.5		)	—			—
Plan participants’ contributions	—			2.4			—			2.2			—			—
Benefits paid	(27.7		)	(12.2		)	(19.3		)	(10.2		)	(0.6		)	(0.6		)
Projected benefit obligation at December 31	640.6			482.5			585.0			438.8			10.4			6.7
Fair value of plan assets at January 1	576.8			400.8			462.5			327.9			—			—
Actual return on plan assets	8.5			13.5			115.2			52.2			—			—
Company contributions	11.0			22.6			29.5			30.1			0.6			0.6
Foreign currency exchange rate changes	—			(40.4		)	—			(1.4		)	—			—
Settlements	(63.8		)	—			(11.1		)	—			—			—
Plan participants’ contributions	—			2.4			—			2.2			—			—
Benefits paid	(27.7		)	(12.2		)	(19.3		)	(10.2		)	(0.6		)	(0.6		)
Fair value of plan assets at December 31	504.8			386.7			576.8			400.8			—			—
Funded status of the plans (liability) at December 31	$	(135.8	)	$	(95.8	)	$	(8.2	)	$	(38.0	)	$	(10.4	)	$	(6.7	)



	Pensions												Other Post-retirement Benefits
	2014						2013						2014			2013
(In millions)	U.S.			Int’l			U.S.			Int’l
Other assets	$	—		$	—		$	38.3		$	3.8		$	—		$	—
Current portion of accrued pension and other post-retirement benefits	(4.1		)	(0.4		)	(9.1		)	(1.3		)	(0.8		)	(0.6		)
Accrued pension and other post-retirement benefits, net of current portion	(131.7		)	(95.4		)	(37.4		)	(40.5		)	(9.6		)	(6.1		)
Funded status recognized in the consolidated balance sheets at December 31	$	(135.8	)	$	(95.8	)	$	(8.2	)	$	(38.0	)	$	(10.4	)	$	(6.7	)

The following table summarizes the pre-tax amounts in accumulated other comprehensive (income) loss at December 31, 2014 and 2013 that have not been recognized as components of net periodic benefit cost:



	Pensions										Other Post-retirement Benefits
	2014					2013					2014			2013
(In millions)	U.S.		Int’l			U.S.		Int’l
Pre-tax amounts recognized in accumulated other comprehensive (income) loss:
Unrecognized actuarial (gain) loss	$	234.9	$	187.8		$	130.1	$	113.6		$	1.1		$	(3.2	)
Unrecognized prior service (credit) cost	0.2		1.3			0.1		1.5			(0.1		)	—
Unrecognized transition asset	—		(0.2		)	—		(0.4		)	—			—
Accumulated other comprehensive (income) loss at December 31	$	235.1	$	188.9		$	130.2	$	114.7		$	1.0		$	(3.2	)

The following tables summarize the projected and accumulated benefit obligations and fair values of plan assets where the projected or accumulated benefit obligation exceeds the fair value of plan assets at December 31, 2014 and 2013:



	Pensions								Other Post-retirement Benefits
	2014				2013				2014		2013
(In millions)	U.S.		Int’l		U.S.		Int’l
Plans with underfunded or non-funded projected benefit obligation:
Aggregate projected benefit obligation	$	640.6	$	482.5	$	46.4	$	151.8	$	10.4	$	6.7
Aggregate fair value of plan assets	$	504.8	$	386.7	$	—	$	110.1	$	—	$	—



	Pensions								Other Post-retirement Benefits
	2014				2013				2014	2013
(In millions)	U.S.		Int’l		U.S.		Int’l
Plans with underfunded or non-funded accumulated benefit obligation:
Aggregate accumulated benefit obligation	$	552.4	$	145.0	$	36.2	$	28.9
Aggregate fair value of plan assets	$	504.8	$	103.1	$	—	$	9.0

The following table summarizes the components of net periodic benefit cost (income) for the years ended December 31, 2014, 2013 and 2012:



	Pensions																		Other Post-retirement Benefits
	2014						2013						2012						2014			2013			2012
(In millions)	U.S.			Int’l			U.S.			Int’l			U.S.			Int’l
Components of net periodic benefit cost (income):
Service cost	$	13.8		$	16.7		$	16.5		$	14.7		$	14.6		$	37.2		$	0.1		$	0.1		$	0.1
Interest cost	29.1			18.5			25.8			16.1			26.9			21.4			0.3			0.2			0.4
Expected return on plan assets	(46.3		)	(30.0		)	(41.6		)	(23.7		)	(39.9		)	(26.4		)	—			—			—
Settlement cost	22.5			—			5.1			—			5.6			8.5			—			—			—
Curtailment cost	2.4			—			—			—			—			—			—			—			—
Amortization of transition asset	—			(0.1		)	—			(0.1		)	—			(0.2		)	—			—			—
Amortization of prior service cost (credit)	(0.1		)	0.4			(0.1		)	0.1			(0.1		)	0.1			—			(0.5		)	(1.1		)
Amortization of net actuarial loss (gain)	12.2			6.7			26.6			5.3			23.9			8.1			(0.3		)	(0.2		)	(0.2		)
Net periodic benefit cost (income)	$	33.6		$	12.2		$	32.3		$	12.4		$	31.0		$	48.7		$	0.1		$	(0.4	)	$	(0.8	)

The following table summarizes changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for the years ended December 31, 2014, 2013 and 2012:



	Pensions																		Other Post-retirement Benefits
	2014						2013						2012						2014			2013			2012
(In millions)	U.S.			Int’l			U.S.			Int’l			U.S.			Int’l
Changes in plan assets and benefit obligations recognized in other comprehensive income (loss):
Net actuarial gain (loss) arising during period	$	(139.6	)	$	(80.9	)	$	193.3		$	(15.6	)	$	(68.9	)	$	53.8		$	(4.0	)	$	1.7		$	—
Prior service (cost) credit arising during period	(2.3		)	(0.3		)	—			(0.6		)	—			—			0.1			—			—
Settlements and curtailments	24.9			—			5.1			—			5.6			8.5			—			—			—
Amortization of net actuarial loss (gain)	12.2			6.7			26.6			5.3			23.9			8.0			(0.3		)	(0.2		)	(0.2		)
Amortization of prior service cost (credit)	(0.1		)	0.4			(0.1		)	0.1			(0.1		)	0.1			—			(0.5		)	(1.1		)
Amortization of transition asset	—			(0.1		)	—			(0.1		)	—			(0.2		)	—			—			—
Total recognized in other comprehensive income (loss)	$	(104.9	)	$	(74.2	)	$	224.9		$	(10.9	)	$	(39.5	)	$	70.2		$	(4.2	)	$	1.0		$	(1.3	)

Included in accumulated other comprehensive income (loss) at December 31, 2014, are noncash, pre-tax charges which have not yet been recognized in net periodic benefit cost (income). The estimated amounts expected to be amortized from the portion of each component of accumulated other comprehensive income (loss) 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)	$	19.5	$	13.0		$	—
Prior service cost (credit)	$	—	$	0.1		$	—
Transition asset	$	—	$	(0.1	)	$	—

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



	Pensions								Other Post-retirement Benefits
	2014				2013				2014		2013
	U.S.		Int’l		U.S.		Int’l
Discount rate	4.20	%	3.21	%	5.10	%	4.30	%	4.20	%	5.10	%
Rate of compensation increase	4.00	%	3.84	%	4.00	%	4.29	%	—		—

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



	Pensions												Other Post-retirement Benefits
	2014				2013				2012				2014		2013		2012
	U.S.		Int’l		U.S.		Int’l		U.S.		Int’l
Discount rate	5.10	%	4.30	%	3.90	%	4.46	%	4.60	%	4.54	%	5.10	%	3.90	%	4.60	%
Rate of compensation increase	4.00	%	4.29	%	4.00	%	3.98	%	4.00	%	4.05	%	—		—		—
Expected rate of return on plan assets	9.00	%	7.61	%	9.00	%	7.44	%	9.00	%	7.62	%	—		—		—

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 balancing risk. Excluding our international plans with insurance-based investments, 89% of our total pension plan assets represent the U.S. qualified plan, the U.K. plan and the Canadian plan. These plans are primarily invested in equity securities 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, 2014 and 2013.


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

•

Equity securities are comprised of common stock, preferred stock, registered investment companies and common/collective trusts. 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 and common/collective trusts are valued based on quoted market prices, which represent the net asset value (“NAV”) of shares held, and primarily include investments in equity securities.


•	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 comprised of registered investment companies. The fair values of registered investment companies are valued based on quoted market prices, which represent the NAV of shares held.

Our pension plan assets measured at fair value are as follows at December 31, 2014 and 2013. Refer to “Fair value measurements” in Note 1 to these consolidated financial statements for a description of the levels.



	U.S.								International
December 31, 2014 (In millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Cash	$	121.2	$	121.2	$	—	$	—	$	0.3	$	0.3	$	—	$	—
Equity securities:
U.S. companies:
Large cap	54.7		54.7		—		—		44.0		44.0		—		—
Mid cap	13.1		13.1		—		—		0.1		0.1		—		—
Small cap	102.1		102.1		—		—		—		—		—		—
International companies	83.3		83.3		—		—		241.9		241.9		—		—
Hedge funds	65.3		—		—		65.3		—		—		—		—
Limited partnerships	60.3		—		—		60.3		—		—		—		—
Insurance contracts	—		—		—		—		100.4		—		100.4		—
Emerging market bonds	4.8		4.8		—		—		—		—		—		—
Total assets	$	504.8	$	379.2	$	—	$	125.6	$	386.7	$	286.3	$	100.4	$	—
December 31, 2013 (In millions)
Cash	$	32.4	$	32.4	$	—	$	—	$	1.1	$	1.1	$	—	$	—
Equity securities:
U.S. companies:
Large cap	169.9		169.9		—		—		60.7		60.7		—		—
Mid cap	12.1		12.1		—		—		0.1		0.1		—		—
Small cap	98.0		98.0		—		—		—		—		—		—
International companies	142.9		142.9		—		—		231.9		231.9		—		—
Hedge funds	64.9		—		—		64.9		—		—		—		—
Limited partnerships	52.1		—		—		52.1		—		—		—		—
Insurance contracts	—		—		—		—		107.0		—		107.0		—
Emerging market bonds	4.5		4.5		—		—		—		—		—		—
Total assets	$	576.8	$	459.8	$	—	$	117.0	$	400.8	$	293.8	$	107.0	$	—

The summary of changes in the fair value of the pension plan Level 3 assets for the years ended December 31, 2014 and 2013 is as follows:



(In millions)	Level 3 Assets
Balance at December 31, 2012	$	95.7
Unrealized gains relating to instruments still held at the reporting date	21.3
Balance at December 31, 2013	$	117.0
Unrealized gains relating to instruments still held at the reporting date	1.6
Purchases, sales, and settlements, net	7.0
Balance at December 31, 2014	$	125.6

Contributions—We expect to contribute approximately $15.9 million to our international pension plans, representing primarily the U.K. and Norway qualified pension plans, and approximately $4.0 million to our U.S. Non-Qualified Defined Benefit Pension Plan in 2015. All of the contributions are expected to be in the form of cash. In 2014 we contributed $33.6 million to the pension plans. In 2013 we contributed $59.6 million to the pension plans, which included $18.0 million 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 2024. Actual benefit payments may differ from expected benefit payments.



	Pensions				Other Post-retirement Benefits
(In millions)	U.S.		International
2015	$	24.7	$	10.8	$	0.7
2016	$	26.0	$	11.3	$	0.8
2017	$	39.9	$	12.1	$	0.8
2018	$	26.6	$	13.6	$	0.8
2019	$	28.2	$	14.7	$	0.8
2020-2024	$	162.7	$	92.9	$	3.6

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 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. Nonelective contributions under the Amended Plans vest with three years of 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 both December 31, 2014 and 2013, our liability for the Non-Qualified Plan was $38.5 million 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, 2014 and 2013, we had investments for the Non-Qualified Plan totaling $30.7 million and $29.1 million, respectively, at fair market value and FMC Technologies stock held in trust of $8.0 million and $7.7 million, respectively, at its cost basis. Refer to Note 16 to these consolidated financial statements for fair value disclosure of the Non-Qualified Plan investments.

We recognized expense of $28.4 million, $23.5 million and $18.4 million, for matching contributions to these plans in 2014, 2013 and 2012, respectively. Additionally, we recognized expense of $18.9 million, $16.2 million and $11.8 million for nonelective contributions in 2014, 2013 and 2012, respectively.