Avis 2015 Annual Report Download - page 106

F-37
The purpose of the fixed income component is to provide a deflation hedge, to reduce the overall volatility of
the pension plans assets in relation to the liability and to produce current income. The pension plans hold
mutual funds that invest in securities issued by governments, government agencies and corporations. The
fixed income component is expected to approximate 35%-55% of the plans’ assets.
The Company used significant observable inputs (Level 2) to determine the fair value of the defined benefit
pension plans’ assets. See Note 2-Summary of Significant Accounting Policies for the Company’s
methodology used to measure fair value.
The following table presents the defined benefit pension plans’ assets measured at fair value, as of
December 31:
Asset Class 2015 2014
Cash equivalents and short term investments $ 12 $ 6
U.S. equities 126 113
Foreign equities 129 163
Government bonds 103 91
Corporate bonds 133 167
Other assets 24 13
Total assets $ 527 $ 553
The Company estimates that future benefit payments from plan assets will be $23 million, $23 million, $25
million, $28 million, $28 million and $156 million for 2016, 2017, 2018, 2019, 2020 and 2021 to 2025,
respectively.
Multiemployer Plans
The Company contributes to a number of multiemployer plans under the terms of collective-bargaining
agreements that cover a portion of its employees. The risks of participating in these multiemployer plans are
different from single-employer plans in the following aspects: (i) assets contributed to the multiemployer
plan by one employer may be used to provide benefits to employees of other participating employers; (ii) if
a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne
by the remaining participating employers; (iii) if the Company elects to stop participating in a multiemployer
plan it may be required to contribute to such plan an amount based on the under-funded status of the plan;
and (iv) the Company has no involvement in the management of the multiemployer plans’ investments. For
the years ended December 31, 2015, 2014 and 2013, the Company contributed a total of $9 million, $9
million and $8 million, respectively, to multiemployer plans.
18. Financial Instruments
Risk Management
Currency Risk. The Company uses currency exchange contracts to manage its exposure to changes in
currency exchange rates associated with its non-U.S.-dollar denominated receivables and forecasted
royalties, forecasted earnings of non-U.S. subsidiaries and forecasted non-U.S.-dollar denominated
acquisitions. The Company primarily hedges a portion of its current-year currency exposure to the
Australian, Canadian and New Zealand dollars, the Euro and the British pound sterling. The majority of
forward contracts do not qualify for hedge accounting treatment. The fluctuations in the value of these
forward contracts do, however, largely offset the impact of changes in the value of the underlying risk they
economically hedge. Forward contracts used to hedge forecasted third-party receipts and disbursements up
to 12 months are designated and do qualify as cash flow hedges. The Company has designated its 6%
Euro-denominated notes as a hedge of its investment in Euro-denominated foreign operations.
The amount of gains or losses reclassified from other comprehensive income (loss) to earnings resulting
from ineffectiveness or from excluding a component of the hedges’ gain or loss from the effectiveness
calculation for cash flow and net investment hedges during 2015, 2014 and 2013 was not material, nor is
the amount of gains or losses the Company expects to reclassify from accumulated other comprehensive
income (loss) to earnings over the next 12 months.