Annual Report 2011 - PGS

Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Historical information
The net pension liability for the past five years were as follows:
December 31,
(In thousands of dollars) 2011 2010 2009 2008 2007
Projected benefit obligation 185,320 155,794 134,510 108,882 135,437
Fair value of plan assets 118,348 109,789 96,531 69,870 98,409
Net funded status (incl. payroll tax) 66,972 46,005 37,979 39,012 37,028
The following table show the experience adjustment from actuarial gain and losses (the effects of differences between the
previous actuarial assumptions and what has actually occurred) of the Projected benefit obligation and plan assets for the years
displayed:
2011 2010 2009 2008 2007
Projected benefit obligation (PBO) (5.90)% (0.55)% 2.0% 3.0% 1.2%
Fair value of plan assets (5.82)% 3.33% 1.9% (35.5)% (1.0)%
Sensitivity
The following table show the sensitivity of pension cost (excluding amortization of actuarial gains and losses) and benefit
obligation (including payroll tax) related to change in discount rate, compensation level and USD:
1% decrease
in discount
rate
1% increase in
annual
compensation
increase
1% decrease
in annual
compensation
increase
10%
appreciation
of USD (a)
1% increase in
(In thousands of dollars)
discount rate
Increase (decrease) in pension cost (4,000) 6,432 2,377 (2,458) (258)
Increase (decrease) in benefit obligation
(PBO) (38,389) 52,316 18,966 (19,722) (16,742)
(a) Based on the Company’s mix of Norwegian plans (NOK denominated) and UK plans (GBP denominated) as of December 31, 2011.
Plan asset allocation
The Company’s pension plan asset allocations, by asset category, are presented by major plan group as follows:
December 31, 2011 December 31, 2010
(In thousands of dollars) Norway UK Norway UK
Fair value of plan assets 32,207 86,141 32,279 76,782
Debt securities 73% 31% 64% 26%
Equity/diversified growth funds 6% 66% 15% 71%
Real estate 18% --- 20% ---
Other 3% 3% 1% 3%
Total 100% 100% 100% 100%
Management of plan assets must comply with applicable laws and regulations in Norway and the UK where the Company
provides defined benefits plans. Within constraints imposed by laws and regulations, and given the assumed pension
obligations and future contribution rates, the majority of assets are managed actively to obtain a long-term rate of return that at
least reflects the chosen investment risk.
The Company expects to contribute approximately $9.8 million to its defined benefit pension plans in 2012.
Defined contribution plans
Substantially all employees not eligible for coverage under the defined benefit plans in Norway and the UK are eligible to
participate in pension plans in accordance with local industrial, tax and social regulations. All of these plans are considered
defined contribution plans.
The Company’s contributions to the Norwegian defined contribution plans for the year ended December 31, 2011, 2010 and
2009 were $1.7 million, $1.4 million and $1.4 million, respectively.
Under the Company’s U.S. defined contribution 401(k) plan, substantially all US employees are eligible to participate upon
completion of certain period-of-service requirements. The plan allows eligible employees to contribute up to 100% of
compensation, subject to IRS and plan limitations, on a pre-tax basis, with a 2011 statutory cap of $16,500 ($22,000 for
employees over 50 years). Employee pre-tax contributions are matched by the Company as follows: the first 3% are matched at
100% and the next 2% are matched at 50%. All contributions vest when made. The employer matching contribution related to
the plan was $1.5 million, $1.6 million and $1.8 million for the years ended December 31, 2011, 2010 and 2009, respectively.
Contributions to the plan by employees for these periods were $4.0 million, $4.2 million and $4.6 million, respectively.
Aggregate employer and employee contributions under the Company’s other plans for the years ended December 31, 2011,
2010 and 2009, were $1.6 million and $0.7 million (2011), $1.7 million and $0.8 million (2010) and $2.3 million and $1.0 million
(2009).
39 PGS ANNUAL REPORT 2011
110 PGS Annual Report 2011