Avis 2011 Annual Report Download - page 92

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F-38
The Company uses a measurement date of December 31 for its pension plans. The funded status of the pension plans as
of December 31, 2011 and 2010 was as follows:
Change in Benefit Obligation 2011 2010
Benefit obligation at end of prior year $ 236 $ 214
Service cost 3 2
Interest cost 17 12
Plan amendments - 1
Actuarial loss 52 17
Net benefits paid (14) (10)
Assumed benefit obligation of acquired entities 306 -
Benefit obligation at end of current year $ 600 $ 236
Change in Plan Assets
Fair value of assets at end of prior year $ 173 $ 156
Actual return on plan assets 22 20
Employer contributions 24 7
Net benefits paid (14) (10)
Acquired fair value of plan assets of acquired entities 207 -
Fair value of assets at end of current year $ 412 $ 173
Total unfunded status at end of year (recognized in
other non-current liabilities in the Consolidated Balance Sheets) $ (188) $ (63)
At December 31, 2011, all of the Company’s plans were under-funded. The estimated amount that will be amortized
from accumulated other comprehensive income into net periodic benefit cost in 2012 is $15 million, which consists of
$14 million for net actuarial loss and $1 million for prior service cost.
The following assumptions were used to determine pension obligations and pension costs for the principal plans in which
the Company’s employees participated:
For the Year Ended December 31,
2011
2010 2009
U.S. Pension Benefit Plans
Discount rate:
Net periodic benefit cost 5.25% 5.75% 6.25%
Benefit obligation 4.00% 5.25% 5.75%
Long-term rate of return on plan assets 8.00% 8.25% 8.25%
Non-U.S. Pension Benefit Plans
Discount rate:
Net periodic benefit cost 5.00% 6.75% 6.75%
Benefit obligation 4.75% 6.50% 6.50%
Long-term rate of return on plan assets 5.25% 6.75% 6.75%
To select a discount rate for its defined benefit pension plans, the Company uses a modeling process that involves
matching the expected cash outflows of such plan, to a yield curve constructed from a portfolio of AA-rated fixed-
income debt instruments. The Company uses the average yield of this hypothetical portfolio as a discount rate
benchmark.
The Company’s expected rate of return on plan assets of 8.00% and 5.25% for U.S. plans and non-U.S. plans,
respectively, used to determine pension obligations and pension costs, is a long-term rate based on historic plan asset
returns over varying long-term periods combined with current market conditions and broad asset mix considerations. The
expected rate of returns are long-term assumption and generally does not change significantly, if at all, from year to year.
As of December 31, 2011, substantially all of the Company’s defined benefit pension plans had a projected benefit
obligation in excess of the fair value of plan assets. The Company expects to contribute approximately $14 million to the
U.S. plans and $10 million to the non-U.S. plans in 2012.