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 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, amongst others. The discount rates used in valuing the plans' benefit obligations were determined with reference to high quality corporate/government bonds that are appropriately matched to the duration of each plan's obligations. The expected long-term rate of return on plan assets, with the exception of plans in Belgium (where the assets are invested in an insurance product that provides guaranteed returns) and India (where asset returns are generally set using government bond yields), is based on a simulation model which selects a single outcome for expected return based on the target asset allocation. The model simulates interest rates, inflation, and asset class returns for up to 20 years and for 1,000 or 2000 economic scenarios to generate a range of likely outcomes. The expected long-term-rate 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
	2013			2012			2013			2012
Net benefit obligation at the beginning of the year	$	509,605		$	482,542		$	1,191,345		$	968,938
Service cost	13,814			12,838			30,117			22,723
Interest cost	18,569			20,923			51,331			54,287
Participants’ contributions	3,071			3,200			11,805			11,614
Actuarial (gains)/losses	(42,689		)	20,342			57,764			142,935
Benefits paid	(33,960		)	(10,978		)	(34,058		)	(30,180		)
Curtailments and settlements	—			(27,702		)	(6,297		)	(6,118		)
Plan amendments	—			—			109			(2,294		)
Business combinations/consolidations	—			8,440			—			8,933
Special termination benefits	29			—			—			—
Effect of exchange rate changes	—			—			5,215			20,507
Net benefit obligation at the end of the year	$	468,439		$	509,605		$	1,307,331		$	1,191,345

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
	2013			2012			2013			2012
Fair Value of plan assets at the beginning of the year	$	359,348		$	285,777		$	877,950		$	744,689
Actual return on plan assets	53,495			62,635			72,368			91,987
Employer contributions	8,823			42,606			53,885			48,374
Participants’ contributions	3,071			3,200			11,805			11,614
Gross benefits paid	(33,960		)	(10,978		)	(34,058		)	(30,180		)
Business combinations/consolidations	—			3,810			—			4,272
Curtailments/settlements	—			(27,702		)	(4,973		)	(6,085		)
Effect of exchange rate changes	—			—			5,502			13,279
Fair Value of plan assets at the end of the year	$	390,777		$	359,348		$	982,479		$	877,950

The following table reconciles the combined funded statuses of the plans recognized in the accompanying Consolidated Balance Sheets at September 27, 2013, and September 28, 2012 (segregated between plans existing within and outside the U.S.) (in thousands):



	U.S. Pension Plans				Non-U.S. Pension Plans
	2013		2012		2013		2012
Net benefit obligation at the end of the year	$	468,439	$	509,605	$	1,307,331	$	1,191,345
Fair Value of plan assets at the end of the year	390,777		359,348		982,479		877,950
Under-funded amount recognized at the end of the year	$	77,662	$	150,257	$	324,852	$	313,395

The following table presents the accumulated benefit obligation at September 27, 2013, and September 28, 2012 (segregated between plans existing within and outside the U.S.) (in thousands):



	U.S. Pension Plans				Non-U.S. Pension Plans
	2013		2012		2013		2012
Accumulated benefit obligation at the end of the year	$	431,726	$	460,618	$	1,222,234	$	1,109,413

The following table presents the amounts recognized in the accompanying Consolidated Balance Sheets at September 27, 2013, and September 28, 2012 (segregated between plans existing within and outside the U.S.) (in thousands):



	U.S. Pension Plans				Non-U.S. Pension Plans
	2013		2012		2013		2012
Accrued benefit cost included in prepaid assets	$	—	$	—	$	15,193	$	13,174
Accrued benefit cost included in current liabilities	—		—		1,000		2,271
Accrued benefit cost included in noncurrent liabilities	77,662		150,257		339,045		324,298
Net amount recognized at the end of the year	$	77,662	$	150,257	$	324,852	$	313,395

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 “Other Noncurrent Assets” in the accompanying Consolidated Balance Sheet at September 27, 2013 is a receivable from the U.S. federal government of approximately $58.4 million ($101.4 million at September 28, 2012) 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:



	2013		2012		2011
Weighted average discount rates	4.4% to 5.0%		3.4% to 3.9%		4.3% to 4.6%
Rates of compensation increases	2.80	%	3.25	%	3.50	%
Expected long-term rates of return on plan assets	7.7	%	7.5	%	7.5	%

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:



	2013	2012	2011
Weighted average discount rates	0.4% to 9.3%	0.6% to 8.4%	2.6% to 5.9%
Rates of compensation increases	2.5% to 7.5%	2.8% to 7.5%	3.0% to 3.5%
Expected long-term rates of return on plan assets	0.4% to 8.5%	2.4% to 8.5%	4.75% to 7.1%

The following table presents certain amounts relating to our U.S. pension plans recognized in accumulated other comprehensive loss at September 27, 2013, and September 28, 2012 (in thousands):



	2013			2012			2011
Arising during the period:
Net actuarial (gain) loss	$	(15,850	)	$	2,756		$	7,486
Reclassification adjustments:
Net actuarial gain	(2,674		)	(2,011		)	(2,011		)
Total	$	(18,524	)	$	745		$	5,475

The following table presents certain amounts relating to our Non-U.S. pension plans recognized in accumulated other comprehensive loss at September 27, 2013, and September 28, 2012 (in thousands):



	2013			2012			2011
Arising during the period:
Net actuarial loss (gain)	$	27,417		$	83,298		$	(73,258	)
Prior service cost (benefit)	297			(1,947		)	1,005
Total	27,714			81,351			(72,253		)
Reclassification adjustments:
Net actuarial gain	(9,778		)	(6,131		)	(4,990		)
Prior service cost (benefit)	41			(23		)	(1,406		)
Total	(9,737		)	(6,154		)	(6,396		)
Total	$	17,977		$	75,197		$	(78,649	)

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 27, 2013, and September 28, 2012 (segregated between plans existing within and outside the U.S.) (in thousands):



	U.S. Pension Plans				Non-U.S. Pension Plans
	2013		2012		2013			2012
Net actuarial loss	$	50,446	$	68,970	$	228,074		$	201,726
Prior service cost	—		—		(466		)	(803		)
Total	$	50,446	$	68,970	$	227,608		$	200,923

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 2013(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	$	3,608		$	15,527
Unrecognized prior service cost	(103		)	(25		)
Accumulated comprehensive loss to be recorded against earnings	$	3,505		$	15,502

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 27, 2013, and September 28, 2012 (the measurement dates used in valuing the plans’ assets and liabilities) were as follows:



	U.S. Pension Plans				Non-U.S. Pension Plans
	2013		2012		2013		2012
Equity securities	74	%	72	%	32	%	41	%
Debt securities	20	%	21	%	31	%	37	%
Real estate investments	1	%	1	%	6	%	6	%
Other	5	%	6	%	31	%	16	%

The following table presents the Fair Value of the Company’s U.S. pension plan assets at September 27, 2013, 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
U.S. Domestic equities	$	247,155	$	—	$	247,155
Overseas equities	40,719		—		40,719
U.S. Domestic bonds	79,482		—		79,482
Cash and equivalents	3,499		—		3,499
Real estate	—		4,411		4,411
Hedge funds	—		15,511		15,511
Total	$	370,855	$	19,922	$	390,777

The following table presents the Fair Value of the Company’s Non-U.S. pension plan assets at September 27, 2013, 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
U.S. Domestic equities	$	108,261	$	—	$	108,261
Overseas equities	207,607		—		207,607
U.S. Domestic bonds	230,202		—		230,202
Overseas bonds	76,372		—		76,372
Cash and equivalents	28,185		—		28,185
Infrastructure / raw goods	—		7,076		7,076
Real estate	—		57,173		57,173
Insurance contracts	—		21,214		21,214
Hedge funds	—		246,389		246,389
Total	$	650,627	$	331,852	$	982,479

The following table presents the Fair Value of the Company’s U.S. pension plan assets at September 28, 2012, 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
U.S. Domestic equities	$	230,862	$	—	$	230,862
Overseas equities	27,343		—		27,343
U.S. Domestic bonds	75,648		—		75,648
Cash and equivalents	6,183		—		6,183
Real estate	—		4,841		4,841
Hedge funds	—		14,471		14,471
Total	$	340,036	$	19,312	$	359,348

The following table presents the Fair Value of the Company’s Non-U.S. pension plan assets at September 28, 2012, 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
U.S. Domestic equities	$	193,715	$	—	$	193,715
Overseas equities	168,097		—		168,097
U.S. Domestic bonds	306,974		—		306,974
Overseas bonds	14,254		—		14,254
Cash and equivalents	27,571		—		27,571
Infrastructure / raw Goods	—		6,111		6,111
Real estate	—		49,537		49,537
Insurance contracts	—		18,291		18,291
Hedge funds	—		93,400		93,400
Total	$	710,611	$	167,339	$	877,950

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 27, 2013 (in thousands):



	Real Estate			Hedge Funds
Balance, beginning of year	$	4,841		$	14,471
Transfers	—			—
Realized and unrealized gains (losses)	(430		)	1,040
Balance, end of year	$	4,411		$	15,511

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 27, 2013 (in thousands):



	Infrastructure / Raw Goods		Real Estate			Insurance Contracts		Hedge Funds
Balance, beginning of year	$	6,111	$	49,537		$	18,291	$	93,400
Purchases, sales, and settlements	—		—			1,646		144,441
Realized and unrealized gains	678		7,670			1,058		4,664
Effect of exchange rate changes	287		(34		)	219		3,884
Balance, end of year	$	7,076	$	57,173		$	21,214	$	246,389

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 28, 2012 (in thousands):



	Real Estate			Hedge Funds
Balance, beginning of year	$	5,353		$	14,845
Transfers	—			—
Realized and unrealized losses	(512		)	(374		)
Balance, end of year	$	4,841		$	14,471

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, 2012 (in thousands):



	Infrastructure / Raw Goods			Real Estate		Insurance Contracts			Hedge Funds
Balance, beginning of year	$	4,776		$	43,997	$	17,293		$	81,776
Purchases, sales, and settlements	—			106		389			—
Realized and unrealized gains	1,572			3,836		1,422			7,975
Transfers	—			—		—			—
Effect of exchange rate changes	(237		)	1,598		(813		)	3,649
Balance, end of year	$	6,111		$	49,537	$	18,291		$	93,400

The following table presents the amount of cash contributions we anticipate making into the plans during fiscal 2014 (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
2014	$	39,259	$	39,298
2015	36,319		41,989
2016	38,455		46,714
2017	41,162		49,767
2018	38,808		54,413
For the period 2019 through 2023	204,246		344,800

The following table presents the components of net periodic pension 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):



	2013			2012			2011
Service cost	$	13,814		$	12,838		$	10,684
Interest cost	18,569			20,923			21,377
Expected return on plan assets	(25,826		)	(23,764		)	(23,558		)
Actuarial loss	8,030			10,981			7,025
Prior service cost	(103		)	(103		)	(103		)
Net pension cost, before special items	14,484			20,875			15,425
Special termination benefits	29			—			120
Settlement loss	—			6,035			—
Total net periodic pension cost recognized	$	14,513		$	26,910		$	15,545

The following table presents the components of net periodic pension 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):



	2013			2012			2011
Service cost	$	30,117		$	22,723		$	30,816
Interest cost	51,331			54,287			54,631
Expected return on plan assets	(54,817		)	(50,996		)	(50,033		)
Actuarial loss	13,276			8,227			13,535
Prior service cost	(43		)	152			303
Net pension cost, before special items	39,864			34,393			49,252
Curtailments and settlements	(383		)	1,326			381
Total net periodic pension cost recognized	$	39,481		$	35,719		$	49,633

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):



	2013		2012		2011
Canada	$	72,660	$	72,053	$	81,608
Europe and Australia	12,930		10,808		12,613
United States	4,366		4,420		4,049
Total	$	89,956	$	87,281	$	98,270

U.S.
Pension Plans

Non-U.S.
Pension Plans