Hertz 2012 Annual Report Download - page 114

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Statements and Supplementary Data.’’ Our 2012 worldwide pre-tax pension expense is $34.7 million,
which represents an increase of $13.4 million from 2011. The increase in expense compared to 2011 is
primarily due to lower expected rates of return in 2012, lower discount rates at the end of 2011 compared
to 2010 and a curtailment gain in the U.K. recorded in 2011.
The funded status (i.e., the dollar amount by which the projected benefit obligations exceeded the
market value of pension plan assets) of our U.S. qualified plan, in which most domestic employees
participate, improved as of December 31, 2012, compared with December 31, 2011 because asset
values increased due to gains in the securities markets. We contributed $38.4 million to our U.S. pension
plan during 2012. We expect to contribute between $20 million and $30 million to our U.S. plan during
2013. The level of 2013 and future contributions will vary, and is dependent on a number of factors
including investment returns, interest rate fluctuations, plan demographics, funding regulations and the
results of the final actuarial valuation.
We participate in various multiemployer pension plans. In the event that we withdraw from participation
in one of these plans, then applicable law could require us to make an additional contribution to the plan,
and we would have to reflect that as an expense in our consolidated statements of operations and as a
liability on our consolidated balance sheet. The amount that we would be required to pay to the plan is
referred to as a withdrawal liability. Our withdrawal liability for any multiemployer plan would depend on
the extent of the plan’s funding of vested benefits. One multiemployer plan in which we participated had
significant underfunded liabilities and we withdrew from that plan in December 2012. Several of our
remaining multiemployer plans have underfunded liabilities. Such underfunding may increase in the
event other employers become insolvent or withdraw from the applicable plan or upon the inability or
failure of withdrawing employers to pay their withdrawal liability. In addition, such underfunding may
increase as a result of lower than expected returns on pension fund assets or other funding deficiencies.
For a discussion of the risks associated with our pension plans, see ‘‘Item 1A—Risk Factors’’ in this
Annual Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See ‘‘Item 7—Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Market Risks’’ included elsewhere in this Annual Report.
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