Avis 2012 Annual Report Download - page 93

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F-37
Defined Benefit Pension Plans
The Company sponsors non-contributory defined benefit pension plans in the United States covering certain eligible
employees and sponsors contributory and non-contributory defined benefit pension plans in certain foreign subsidiaries
with some plans offering participation in the plans at the employees’ option. The most material of the non-U.S. defined
benefit pension plans is operated in the United Kingdom. Under these plans, benefits are based on an employee’s years
of credited service and a percentage of final average compensation. However, the majority of such plans are frozen to
new employees and are no longer accruing benefits. There is an unfunded defined benefit pension plan for employees in
Germany, which is closed to new employees, and a statutorily determined unfunded defined benefit termination plan for
employees in Italy.
The funded status of the defined benefit pension plans is recognized on the Consolidated Balance Sheets and the gains or
losses and prior service costs or credits that arise during the period, but are not recognized as components of net periodic
benefit cost, are recognized as a component of accumulated other comprehensive income (loss), net of tax.
The components of net periodic benefit cost and the assumptions related to the cost consisted of the following:
Year Ended December 31,
2012
2011
2010
Service cost
$
5
$
3
$
2
Interest cost
27
17
12
Expected return on plan assets
(25)
(17)
(11)
Amortization of unrecognized amounts
14
8
6
Net periodic benefit cost
$
21
$
11
$
9
The Company uses a measurement date of December 31 for its pension plans. The funded status of the pension plans as
of December 31, 2012 and 2011 was as follows:
Change in Benefit Obligation
2012
2011
Benefit obligation at end of prior year
$
600
$
236
Service cost
5
3
Interest cost
27
17
Plan amendments
1
-
Actuarial loss
58
52
Net benefits paid
(21)
(14)
Assumed benefit obligation of acquired entities
-
306
Benefit obligation at end of current year
$
670
$
600
Change in Plan Assets
Fair value of assets at end of prior year
$
412
$
173
Actual return on plan assets
56
22
Employer contributions
18
24
Net benefits paid
(21)
(14)
Acquired fair value of plan assets of acquired entities
-
207
Fair value of assets at end of current year
$
465
$
412
Total unfunded status at end of year (recognized in other non-current liabilities in the
Consolidated Balance Sheets)
$
(205)
$
(188)
At December 31, 2012, 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 2013 is $14 million, which consists of
$13 million for net actuarial loss and $1 million for prior service cost.