Fluor 2013 Annual Report Download - page 119

FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The ranges of assumptions indicated below cover defined benefit pension plans in the United States,
the Netherlands, the United Kingdom, Australia, the Philippines and Germany (2011 only) and are based
on the economic environment in each host country at the end of each respective annual reporting period.
The discount rate assumption for the U.S. defined benefit pension plan was determined by discounting the
expected future benefit payments using yields based on a portfolio of high quality corporate bonds having
maturities that are consistent with the expected timing of future payments to plan participants. The
discount rates for the non-U.S. defined benefit pension plans were determined primarily based on a
hypothetical yield curve developed from the yields on high quality corporate and government bonds with
durations consistent with the pension obligations in those countries. The expected long-term rate of return
on asset assumptions utilizing historical returns, correlations and investment manager forecasts are
established for each major asset category including public U.S. and international equities, U.S. private
equities and debt securities.
U.S. Pension Plan Non-U.S. Pension Plans
December 31, December 31,
2013 2012 2011 2013 2012 2011
For determining projected benefit
obligation at year-end:
Discount rates 4.95% 4.05% 5.05% 3.55-5.50% 3.60-6.00% 3.75-6.75%
Rates of increase in compensation
levels N/A N/A N/A 2.25-9.00% 2.25-9.00% 2.25-9.00%
For determining net periodic cost for
the year:
Discount rates 4.05% 5.05% 5.65% 3.60-6.00% 3.75-6.75% 5.10-9.20%
Rates of increase in compensation
levels N/A N/A 4.00% 2.25-9.00% 2.25-9.00% 2.25-9.00%
Expected long-term rates of return
on assets 4.25% 5.25% 6.69% 5.00-7.00% 5.00-7.00% 5.00-8.00%
The company evaluates the funded status of each of its retirement plans using the above assumptions
and determines the appropriate funding level considering applicable regulatory requirements, tax
deductibility, reporting considerations and other factors. The funding status of the plans is sensitive to
changes in long-term interest rates and returns on plan assets, and funding obligations could increase
substantially if interest rates fall dramatically or returns on plan assets are below expectations. Assuming
no changes in current assumptions, the company expects to fund approximately $30 million to $60 million
for calendar year 2014, which is expected to be in excess of the minimum funding required. If the discount
rates were reduced by 25 basis points, plan liabilities for the U.S. and non-U.S. plans would increase by
approximately $16 million and $42 million, respectively.
During the third quarter of 2013, the company and its Board of Directors approved an amendment to
the U.S. defined benefit pension plan to close participation and freeze the accrual of future service-related
benefits for craft participants on December 31, 2013. Also, the company’s defined benefit pension plan in
the Netherlands was closed to new participants on December 31, 2013. These changes did not have a
material impact on the pension obligations or accumulated other comprehensive income balances of the
plans.
The company and its Board of Directors previously approved amendments to freeze the accrual of
future service-related benefits for certain eligible salaried participants of the U.S. pension plan as of
December 31, 2011 and eligible participants of the U.K. pension plan as of April 1, 2011.
F-20