Fluor 2011 Annual Report Download - page 119

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FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 fixed income securities.
U.S. Pension Plan Non-U.S. Pension Plans
December 31, December 31,
2011 2010 2009 2011 2010 2009
For determining projected benefit
obligation at year-end:
Discount rates 5.05% 5.65% 6.50% 3.75-6.75% 5.10-5.50% 5.75%
Rates of increase in compensation
levels N/A 4.00% 4.00% 2.25-9.00% 2.25-4.50% 3.00-4.50%
For determining net periodic cost for
the year:
Discount rates 5.65% 6.50% 6.25% 5.10-9.20% 5.75% 4.75-6.50%
Rates of increase in compensation
levels 4.00% 4.00% 4.00% 2.25-9.00% 2.25-4.50% 3.00-4.50%
Expected long-term rates of return
on assets 6.69% 7.50% 8.00% 5.00-8.00% 5.00-7.00% 5.00-7.00%
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 2012, 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 $18 million and $26 million, respectively.
During the first quarter of 2011, the company and its Board of Directors approved an amendment to
the U.K. pension plan to freeze the accrual of future service-related benefits for certain eligible
participants on April 1, 2011. Accordingly, the company remeasured the assets and liabilities of the U.K.
pension plan and recognized a curtailment accounting event, resulting in a net reduction in the pension
obligation of $18 million and an after-tax decrease in accumulated other comprehensive loss of $11 million.
During the third quarter of 2011, the company and its Board of Directors approved an amendment to
the U.S. pension plan to freeze the accrual of future service-related benefits for certain eligible participants
on December 31, 2011. Accordingly, as of September 30, 2011, the company remeasured the assets and
liabilities of the U.S. pension plan and recognized a curtailment accounting event, resulting in a net
reduction in the pension obligation of $29 million and an after-tax decrease in accumulated other
comprehensive loss of $18 million.
F-18