Avis 2013 Annual Report Download - page 109
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F-37
The Company uses a measurement date of December 31 for its pension plans. The funded status of the
pension plans were as follows:
As of December 31,
Change in Benefit Obligation 2013 2012
Benefit obligation at end of prior year $ 670 $ 600
Service cost 55
Interest cost 26 27
Plan amendments 1 1
Actuarial (gain) loss (11) 58
Net benefits paid (21) (21)
Benefit obligation at end of current year $ 670 $ 670
Change in Plan Assets
Fair value of assets at end of prior year $ 465 $ 412
Actual return on plan assets 56 56
Employer contributions 17 18
Net benefits paid (21) (21)
Fair value of assets at end of current year $ 517 $ 465
Total unfunded status at end of year (recognized in other non-current
liabilities in the Consolidated Balance Sheets) $ (153) $ (205)
The estimated amount that will be amortized from accumulated other comprehensive income into net
periodic benefit cost in 2014 is $3 million, which consists of $2 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,
2013 2012 2011
U.S. Pension Benefit Plans
Discount rate:
Net periodic benefit cost 3.75% 4.00% 5.25%
Benefit obligation 4.75% 4.00% 4.00%
Long-term rate of return on plan assets 7.50% 7.50% 8.00%
Non-U.S. Pension Benefit Plans
Discount rate:
Net periodic benefit cost 4.50% 4.75% 5.00%
Benefit obligation 4.50% 4.50% 4.75%
Long-term rate of return on plan assets 5.25% 5.35% 5.25%
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 7.50% 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 in individual jurisdictions, over varying long-term periods combined with current
market conditions and broad asset mix considerations.
As of December 31, 2013, 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 $9 million to the U.S. plans and $11 million to the non-U.S. plans in 2014.
The Company’s defined benefit pension plans’ assets are invested primarily in mutual funds and may
change in value due to various risks, such as interest rate and credit risk and overall market volatility. Due