Form 11-K
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

Form 11-K

 

 

 

x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             

Commission File No. 1-10308

 

 

 

A. Full title of the plan and address of the plan, if different from that of the issuer named below:

AB Car Rental Services, Inc.

Retirement Savings Plan

For Bargaining Hourly Employees

 

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

Avis Budget Group, Inc.

6 Sylvan Way

Parsippany, N.J. 07054

 

 

 


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AB CAR RENTAL SERVICES, INC.

RETIREMENT SAVINGS PLAN FOR BARGAINING HOURLY EMPLOYEES

TABLE OF CONTENTS

 

 

     Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM – J.H. Cohn LLP

   1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM – Deloitte & Touche, LLP

   2

FINANCIAL STATEMENTS:

  

Statements of Net Assets Available for Benefits as of December 31, 2009 and 2008

   3

Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2009

   4

Notes to Financial Statements

   5

SUPPLEMENTAL SCHEDULES:

  

Form 5500, Schedule H, Part IV, Line 4i – Schedule of Assets (Held at End of Year) as of December  31, 2009

   13

Form 5500, Schedule H, Part IV, Line 4A – Schedule of Delinquent Participant Contributions Year Ended December 31, 2009

   14

SIGNATURE

   15

EXHIBIT 23.1 – CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM – J.H. Cohn LLP

   16

EXHIBIT 23.2 – CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM – Deloitte  & Touche LLP

   17

All other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Trustee and Participants of the

AB Car Rental Services, Inc. Retirement Savings Plan

For Bargaining Hourly Employees

We have audited the accompanying statement of net assets available for benefits of the AB Car Rental Services, Inc. Retirement Savings Plan For Bargaining Hourly Employees (the “Plan”) as of December 31, 2009, and the related statement of changes in net assets available for benefits for the year then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the AB Car Rental Services, Inc. Retirement Savings Plan For Bargaining Hourly Employees as of December 31, 2009, and the changes in net assets available for benefits for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of (1) assets (held at end of year) as of December 31, 2009 and (2) delinquent participant contributions for the year ended December 31, 2009 are presented for the purpose of additional analysis and are not a required part of the 2009 basic financial statements, but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan’s management. Such supplemental schedules have been subjected to the auditing procedures applied in our audit of the 2009 basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the 2009 basic financial statements taken as a whole.

 

/s/ J.H. Cohn LLP

Roseland, New Jersey

June 29, 2010

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Trustee and Participants of the

AB Car Rental Services, Inc. Retirement Savings Plan

For Bargaining Hourly Employees:

We have audited the accompanying statement of net assets available for benefits of the AB Car Rental Services, Inc. Retirement Savings Plan for Bargaining Hourly Employees (the “Plan”) as of December 31, 2008. This financial statement is the responsibility of the Plan’s management. Our responsibility is to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, such financial statement presents fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2008, in conformity with accounting principles generally accepted in the United States of America.

 

/s/ Deloitte and Touche LLP
New York, New York
June 26, 2009

 

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AB CAR RENTAL SERVICES, INC.

RETIREMENT SAVINGS PLAN FOR BARGAINING HOURLY EMPLOYEES

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

AS OF DECEMBER 31, 2009 AND 2008

 

 

     2009    2008

ASSETS:

     

Participant-directed investments at fair value:

     

Cash and cash equivalents

   $ 10,970    $ —  

Mutual funds

     14,670,087      1,262,475

Common/collective trusts

     15,536,409      843,978

Avis Budget Group, Inc. common stock

     667,709      5,946

Loans to participants

     1,862,977      127,616
             

Total investments

     32,748,152      2,240,015
             

Receivables:

     

Participant contributions

     73,280      9,401

Employer contributions

     10,194      2,433

Interest and dividends

     206      177
             

Total receivables

     83,680      12,011
             

NET ASSETS AVAILABLE FOR BENEFITS AT FAIR VALUE

     32,831,832      2,252,026

Adjustments from fair value to contract value for fully benefit-responsive investment contracts

     1,063,139      128,753
             

NET ASSETS AVAILABLE FOR BENEFITS

   $ 33,894,971    $ 2,380,779
             

The accompanying notes are an integral part of these financial statements.

 

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AB CAR RENTAL SERVICES, INC.

RETIREMENT SAVINGS PLAN FOR BARGAINING HOURLY EMPLOYEES

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

FOR THE YEAR ENDED DECEMBER 31, 2009

 

 

ADDITIONS TO NET ASSETS:

  

Net investment income:

  

Interest

   $ 304,336

Dividends

     306,646

Net appreciation in fair value of investments

     2,218,021
      

Net investment income

     2,829,003
      

Contributions:

  

Participants

     2,280,730

Employer

     335,772

Rollovers

     964
      

Total contributions

     2,617,466
      

Net transfers of participant account balances from affiliated plans

     29,864,277
      

Total additions

     35,310,746
      

DEDUCTIONS FROM NET ASSETS:

  

Benefits paid to participants

     3,787,489

Administrative expenses

     9,065
      

Total deductions

     3,796,554
      

NET INCREASE IN ASSETS

     31,514,192

NET ASSETS AVAILABLE FOR BENEFITS:

  

BEGINNING OF YEAR

     2,380,779
      

END OF YEAR

   $ 33,894,971
      

The accompanying notes are an integral part of these financial statements.

 

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AB CAR RENTAL SERVICES, INC.

RETIREMENT SAVINGS PLAN FOR BARGAINING HOURLY EMPLOYEES

NOTES TO FINANCIAL STATEMENTS

 

 

1. DESCRIPTION OF THE PLAN

The following description of the AB Car Rental Services, Inc. Retirement Savings Plan for Bargaining Hourly Employees (the “Plan”) provides only general information. Participants should refer to the Summary Plan Description or the Plan document, which are available from AB Car Rental Services, Inc. (the “Company”) for a more complete description of the Plan’s provisions. The Company is a wholly-owned subsidiary of Avis Budget Group, Inc. (“ABGI”).

The Plan is a defined contribution plan that provides Internal Revenue Code (“IRC”) Section 401 (k) employee salary deferral benefits and additional employer contributions for the Company’s eligible employees. The Avis Budget Group, Inc. Employee Benefits Committee is the Plan administrator (“Plan Administrator”). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). Merrill Lynch Trust Company FSB (the “Trustee”) is the Plan’s trustee.

Effective January 1, 2009, ABGI approved the merger of the Avis Voluntary Investment Savings Plan for Bargaining Employees (the “Avis Union Plan”) and the Budget Rent A Car System, Inc. Employee Retirement Plan for Collectively Bargained Employees (the “Budget Plan”), which were ABGI affiliated plans, into the Plan. As of January 1, 2009, their participants and participants’ accounts were consolidated into the Plan. The related assets of the Avis Union and Budget Plans were transferred to the Plan between January 1, 2009 and May 31, 2009.

The following is a summary of certain Plan provisions:

Eligibility – Each employee of the Company, who as of March 31, 2004, was eligible to participate in a qualified defined contribution plan of an ABGI subsidiary became an eligible participant on the later of (i) April 1, 2004 or (ii) the date that such employee ceased participation in such other qualified defined contribution plan. Employees who are members of the collective bargaining unit covered by a collective bargaining agreement between such unit and the Company are eligible to participate in the plan upon attainment of age 21 and completion of one year of service (a year of service means the completion of at least 1,000 hours of service during the first twelve months of employment or the completion of at least 1,000 hours in any Plan year that follows the employment date).

Participant Contributions – Participants may elect to make pre-tax contributions up to 16% of pre-tax annual compensation up to the statutory maximum of $16,500 for 2009. In addition, employees participating in the Plan may make additional contributions from 1% to 10% of specified compensation on a current, after-tax basis, subject to certain limitations imposed by law. Certain eligible participants (age 50 and over) are permitted to contribute an additional $5,500 as a catch up contribution, resulting in a total pre-tax contribution of $22,000 for 2009.

Employer Contributions – The Plan permits employer and/or employer matching contributions in accordance with the terms of the collective bargaining agreement in effect for the Plan year with respect to the collective bargaining unit of which the participant is a member.

Rollovers – All employees, upon commencement of employment, are provided the option of making a rollover contribution into the Plan in accordance with IRS regulations.

 

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Investments – Participants direct the investment of contributions to various investment options and may reallocate investments among the various funds or change future contributions on a daily basis. The fund reallocation must be in 1% increments and is limited to one reallocation per day, subject to restrictions imposed by the mutual fund companies to curb short-term trading. Participants should refer to the Plan document regarding investments in Company common stock. Participants should refer to each fund’s prospectus for a more complete description of the risks and restrictions associated with each fund.

Vesting – At any time, participants are 100% vested in their pre-tax and after tax contributions to the Plan plus actual earnings thereon. Employer contributions vest at a rate of 20% per year and are fully vested upon 5 years of service.

Loan Provisions – Participants may borrow from their fund accounts up to the lesser of $50,000 or 50% of their account balance provided the account balance is at least $2,000. The loans are secured by the balance in the participant’s vested account balance and bear interest at rates commensurate with local prevailing rates as determined quarterly by the Plan Administrator. Loan repayments are made through payroll deductions over a period not to exceed 5 years, unless the proceeds of loan are used to purchase the principal residence of the participant, in which case the term is not to exceed 15 years.

Participant Accounts – A separate account is maintained for each participant. Each participant’s account is credited with the participant’s contributions and an allocation of Plan earnings including interest, dividends and net realized and unrealized appreciation in fair value of investments. Each participant’s account is also charged with an allocation of net realized and unrealized depreciation in fair value of investments, certain administrative expenses and withdrawals. Allocations are based on participant account balances, as defined in the Plan document. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Payment of Benefits to Participants – Distribution of the participant’s account may be made in a lump sum payment upon retirement, death or disability, or upon termination of employment. Participants are entitled to withdraw certain portions of their vested balance. Participants are permitted to process in-service withdrawals, in accordance with Plan provisions, upon attaining age 59 1/2 or for hardship in certain circumstances, as defined in the Plan document, before that age.

Forfeited Accounts – Forfeited balances of terminated participants’ non-vested accounts are first used to pay Plan expenses, if any, and then to decrease employer contributions. As of December 31, 2009 and 2008, forfeited account balances amounted to $22,321 and $11,902, respectively. During 2009, $7,090 of forfeited non-vested accounts were used to reduce employer contributions.

Administrative Expenses – Administrative expenses of the Plan may be paid by the Company; otherwise such expenses are paid by the Plan. Fees for participants’ distributions, withdrawals, loans and similar expenses are paid by the Plan.

Transfers from Affiliated Plans – Net transfers of participants account balances from affiliated plans totaled $29,864,277 for the year ended December 31, 2009.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting – The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

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Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and related disclosures. Actual results could differ from those estimates.

Risks and Uncertainties – The Plan invests in various securities, including mutual funds, common/collective trusts and Avis Budget Group, Inc. common stock. Investment securities are exposed to various risks, such as interest rate and credit risks and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes would materially affect participant account balances and the amounts reported in the financial statements.

Cash and Cash Equivalents – The Plan considers highly liquid investments with an original maturity of three months or less to be cash equivalents.

Investment Contracts – In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) topic 962, Plan Accounting — Defined Contribution Plans, investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan. As required by the ASC, the Statements of Net Assets Available for Benefits presents investment contracts at fair value as well as an additional line item showing an adjustment of fully benefit-responsive investment contracts from fair value to contract value. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.

Valuation of Investments and Income Recognition – The Plan’s investments are stated at fair value. Securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the Plan year. Mutual funds are valued at the quoted market price, which represents the net asset value of shares held by the Plan at year-end. Common/collective trusts are valued at the net asset value of the shares held by the Plan at year-end, which is based on the fair value of the underlying assets. Loans to participants, which are secured by the borrowing participant’s vested account balance, are valued at outstanding loan balances, which approximate fair value.

One of the Plan’s common/collective trust investments is the Merrill Lynch Retirement Preservation Trust (“MLPT”). The MLPT invests in traditional guaranteed investment contracts (“traditional GICs”) and wrapped portfolios of fixed income investments (“synthetic GICs”). Traditional GICs are unsecured, general account obligations of insurance companies or banks and are collaterized by the assets of the insurance company or bank. Synthetic GICs consist of a portfolio of securities owned by the MLPT and a benefit responsive, contract value wrap contract purchased for the portfolio. The wrap contract amortizes gains and losses of the underlying securities over the portfolio duration, and assures that contract value, benefit responsive payments will by made for participant directed withdrawals. Wrap contracts are issued by financially responsible third parties, typically banks, insurance companies, or other financial services institutions and are designed to allow a stable asset fund to maintain a stable contract value and to protect a fund in extreme circumstances. In a typical wrap contract, the wrap issuer agrees to pay a fund the difference between the contract value and the market value of the underlying assets for participant directed redemptions once the market value has been totally exhausted.

Wrap contracts accrue interest using a formula called the “crediting rate.” The crediting rate is primarily based on the current yield-to-maturity of the covered investments, plus or minus amortization of the difference between the market value and contract value of the covered investments over the duration of the covered investments at the time of computation. The crediting

 

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rate can be adjusted periodically and is usually adjusted either monthly or quarterly, but in no event is the crediting rate less than zero. The crediting rate on traditional GICs is typically fixed for the life of the investment. The crediting rate on synthetic GICs is typically reset every month or quarter based on the contract value of the contract, the market yield of the underlying assets, the market value of the underlying assets and the average duration of the underlying assets.

Certain events limit the ability of the Plan to transact at contract value with the insurance companies and financial institution issuers of traditional GICs or synthetic GICs. Such events include the following: (i) layoffs, (ii) bankruptcy, (iii) plant closings, (iv) plan termination or mergers, (v) early retirement incentive, (vi) employee communications designed to induce participants to transfer from the fund, or (vii) competing fund transfer or violation of equity wash or equivalent rules in place and changes of qualification status of employer or plan. As of December 31, 2009, the MLPT Trustee does not believe that the occurrence of an event that would limit the Trust’s ability to transact at contract value with participants is probable.

The fair value of the underlying debt securities are valued at the last available bid price in over the counter markets or on the basis of values obtained by independent valuation groups. Traditional GICs are valued using a discounted cash flow methodology, synthetic GICs are valued on a monthly basis per the terms of the applicable contract using valuations provided by a pricing service approved by the Trustee, and the fair value of the wrap contracts is determined using a market approach discounting methodology. The investment contracts are valued at fair value of the underlying investments and then adjusted by the issuer to contract value.

Participants may direct the withdrawal or transfer of all or a portion of their investment at contract value. Contract value represents contributions made to the fund, plus earnings, less participant withdrawals. The fair value recorded in the Plan’s financial statements for such fund was $14,656,151 and $797,511 at December 31, 2009 and 2008, respectively. The average yield earned by the MLPT calculated based on the change in the net asset value between the beginning and the end of the year was 1.82% and 4.67% for the years ended December 31, 2009 and 2008, respectively. The average yield earned with an adjustment to reflect the actual interest rate credited to participants was 2.23% and 3.97% for the years ended December 31, 2009 and 2008, respectively.

Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date and interest is recorded when earned. The accompanying Statement of Changes in Net Assets Available for Benefits presents net appreciation in fair value of investments, which includes unrealized gains and losses on investments held at December 31, 2009, realized gains and losses on investments sold during the year then ended and management and operating expenses associated with the Plan’s investments in mutual funds and common/collective trusts.

Management fees and operating expenses charged to the Plan for investments in the mutual funds and common/collective trusts are deducted from income earned on a daily basis and are not separately reflected. Consequently, management fees and operating expenses are reflected as a reduction of investment return for such investments.

Benefit Payments – Benefits to participants are recorded upon distribution. Amounts allocated to accounts of participants who have elected to withdraw from the Plan, but have not yet received payments from the Plan, totaled $10,654 and $0 at December 31, 2009 and 2008, respectively.

Accounting Pronouncements Adopted During 2009

In May 2009, the FASB issued new guidance related to ASC topic 855, Subsequent Events, to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The Plan adopted this guidance on December 31, 2009, as required, and it did not have a significant impact on its financial statements.

 

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In June 2009, the FASB issued new guidance related to ASC topic 105, Generally Accepted Accounting Principles. This topic allows the FASB ASC to become the single source of authoritative U.S. accounting and reporting standards, other than guidance issued by the SEC. The Plan adopted this guidance on July 1, 2009, as required, and it did not have a significant impact on its financial statements.

In August 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05, “Measuring Liabilities at Fair Value” (“ASU No. 2009-05”). ASU No. 2009-5 clarifies, among other things, that when a quoted price in an active market for the identical liability is not available, an entity must measure fair value using one or more specified techniques. The Plan adopted this guidance on December 31, 2009, as required, and it had no impact on its financial statements.

In September 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-12 “Fair Value Measurements and Disclosures: Investments in Certain Entities that Calculate Net Asset Value per Share (or its Equivalent)” (“ASU No. 2009-12”), which amended ASC Subtopic 820-10, Fair Value Measurements and Disclosures — Overall. ASU No. 2009-12 permits, as a practical expedient, an entity holding investments in certain entities that calculate net asset value per share or its equivalent for which the fair value is not readily determinable, to measure the fair value of such investments on the basis of that net asset value per share or its equivalent without adjustment. The ASU requires enhanced disclosures about the nature and risks of investments within its scope. Such disclosures include the nature of any restrictions on an investor’s ability to redeem its investments at the measurement date, any unfunded commitments, and the investment strategies of the investee. The Plan adopted this guidance as of December 31, 2009, and it did not have a significant impact on its financial statements.

 

3. INVESTMENTS

The following tables present investments at fair value that represent five percent or more of the Plan’s net assets available for benefits as of December 31:

 

     2009

Merrill Lynch Retirement Preservation Trust (a) (b)

   $ 14,656,151

PIMCO Total Return Fund

     3,428,735

Loans to participants

     1,862,977

Davis NY Venture Fund

     1,852,162

American Growth Fund

     1,840,539
     2008

Merrill Lynch Retirement Preservation Trust (a) (b)

   $ 797,511

Davis NY Venture Fund

     232,394

The Oakmark Equity and Income Fund

     226,681

PIMCO Total Return Fund

     225,528

Oppenheimer Capital Appreciation Fund

     121,398

Loans to participants

     127,616

 

  ( a)

Permitted party-in-interest

  ( b)

The contract value of Merrill Lynch Retirement Preservation Trust was $15,719,290 and $926,263 at December 31, 2009 and 2008, respectively.

 

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During 2009, the Plan’s investments at fair value (including gains and losses on investments bought and sold, as well as held during the year) appreciated in fair value, as follows:

 

     2009

Mutual funds

   $ 1,124,236

Common stock (*)

     957,396

Common/collective trusts

     136,389
      
   $ 2,218,021
      

 

  ( *)

Consists of common stock of Avis Budget Group, Inc.

 

4. FEDERAL INCOME TAX STATUS

The IRS determined and informed the Company by letter dated March 6, 2006 that the Plan and related trust are designed in accordance with applicable sections of the IRC. The Plan has been amended since receiving this determination letter. However, the Plan Administrator and the Plan’s tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC and that the Plan and related trust continue to be tax-exempt. Therefore, no provision for income taxes has been included in the Plan’s financial statements.

 

5. EXEMPT PARTY-IN-INTEREST TRANSACTIONS

A portion of the Plan’s investments represents shares in funds managed by Merrill Lynch Trust Company FSB, the trustee of the Plan. Therefore, these transactions qualify as exempt party-in-interest transactions.

At December 31, 2009 and 2008, the Plan held 50,892 and 8,494 shares, respectively, of Avis Budget Group, Inc. common stock with a cost basis of $157,225 and $12,506, respectively. During 2009 and 2008, the Plan did not receive any dividends from ABGI, which is the parent company of the sponsoring employers.

 

6. PLAN TERMINATION

Although the Company has not expressed any intention to do so, the Company reserves the rights to modify, suspend, amend or terminate the Plan in whole or in part at any time subject to the provisions of ERISA. If the Plan is terminated, the amounts credited to the employer contribution accounts of all participants become fully vested.

 

7. RECONCILIATION TO FORM 5500

The following is a reconciliation of net assets available for benefits per the financial statements to Form 5500 as of December 31:

 

              
     2009     2008  

Net assets available for benefits per the financial statements

   $ 33,894,971      $ 2,380,779   

Less: Amounts allocated to withdrawing participants

     (6,479     —     

Adjustment from contract value to fair value for fully benefit-responsive investment contracts

     (1,063,139     (128,753
                

Net assets available for benefits per Form 5500

   $ 32,825,353      $ 2,252,026   
                

 

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The following is a reconciliation of benefits paid to participants per the financial statements for the year ended December 31, 2009 to Form 5500:

 

Benefits paid to participants per the financial statements

   $ 3,787,489   

Less:

  Certain deemed distributions of participant loans      (132,777
  Corrective distributions      (23,693

Add:

  Amounts allocated to withdrawing participants at December 31, 2009      6,479   
          

Benefits paid to participants per Form 5500

   $ 3,637,498   
          

Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 2009, but not yet paid as of that date.

The following is a reconciliation of changes in net assets available for benefits per the financial statements for the year ended December 31, 2009 to the net income per Form 5500:

 

Increase in net assets available for benefits per the financial statements

   $ 31,514,192   

Less:

  Amounts allocated to withdrawing participants      (6,479
  Transfer of assets to the Plan (Reflected in line L- Transfer of assets-of Form 5500)      (29,864,277
  December 31, 2009 adjustment for contract value to fair value for fully benefit-responsive investment contracts      (1,063,139

Add:

  December 31, 2008 adjustment for contract value to fair value for fully benefit-responsive investment contracts      128,753   
          

Net income per Form 5500

   $ 709,050   
          

 

8. FAIR VALUE MEASUREMENTS

The Plan measures certain financial assets and liabilities at fair value in accordance with FASB ASC topic 820, Fair Value Measurements, which requires the Plan to classify its investments into (i) Level 1, which refers to securities valued using quoted prices from active markets for identical assets, includes the common stock of publicly traded companies, mutual funds with quoted market prices and common/collective trusts with quoted market prices which operate similar to mutual funds, (ii) Level 2, which refers to securities for which significant other observable market inputs are readily available, including common/collective trusts for which quoted market prices are not readily available and participant loans, which are fully secured by the participant’s vested account balance, the principal and interest are repaid through payroll deductions and bear interest rates commensurate with prevailing market rates that market participants would use for similar assets, and (iii) Level 3, which refers to securities valued based on significant unobservable inputs. See Note 2—Summary of Significant Accounting Policies for the Plan’s valuation methodology used to measure fair value.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value. There have been no changes in the methodologies used at December 31, 2009 and 2008.

 

   

Avis Budget Group, Inc. common stock – The fair value of Avis Budget Group common stock is valued at the closing price reported on the active markets on which the security is traded. As such, these assets are classified as Level 1.

 

   

Common/collective trusts – are comprised of fully benefit-responsive investment contracts (see Note 2) valued based on the net asset value (“NAV”) of units held by the Plan at year-end. Although the common/collective trusts are not available in an active market, the NAV of the units are approximated based on the quoted prices of the underlying investments that are traded in an active market. The Company has no unfunded commitments related to any of these investments and there are no Plan initiated redemption restrictions on these investments, with the exception of the MLPT, which requires 30 days written notice before the investment may be redeemed and such redemption is limited to $6.3 million, per month. There are no redemption restrictions on the participant’s holdings in these investments.

 

   

Mutual funds – Valued at the NAV of shares held by the Plan at year end. NAV is derived by the quoted prices of underlying investments.

 

   

Loans to participants are valued at amortized cost, which approximates fair value.

 

   

Cash and cash equivalents are valued at cost, which approximates fair value.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 

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The following tables sets forth by level, within the fair value hierarchy, the Plan’s investments at fair value as of December 31, 2009:

 

Asset Class

   Level 1    Level 2    Total

Common stock

   $ 667,709    $ —      $ 667,709

Mutual funds:

        

Large-cap growth

     2,864,573      —        2,864,573

Large-cap value

     864,871      —        864,871

Large-cap blend

     3,511,381      —        3,511,381

Mid-cap growth

     1,434,771      —        1,434,771

Mid-cap value

     124,225      —        124,225

Small-cap growth

     127,357      —        127,357

Small-cap blend

     658,968      —        658,968

Foreign large-cap blend

     1,144,246      —        1,144,246

Bond funds

     3,677,479      —        3,677,479

Real estate

     262,216      —        262,216

Common/collective trusts:

        

Traditional GICs

     —        90,477      90,477

Synthetic GICs

     —        13,878,289      13,878,289

Large-cap blend

     —        182,743      182,743

Foreign large-cap blend

     —        219,667      219,667

Emerging markets

     —        477,848      477,848

Other assets

     —        687,385      687,385

Participant loans

     —        1,862,977      1,862,977
                    

Total

   $ 15,337,796    $ 17,399,386    $ 32,737,182
                    

The following tables sets forth by level, within the fair value hierarchy, the Plan’s investments at fair value as of December 31, 2008:

 

Asset Class

   Level 1    Level 2    Total

Common stock

   $ 5,946    $ —      $ 5,946

Mutual funds

     1,262,475      —        1,262,475

Common/collective trusts

     —        843,978      843,978

Participant loans

     —        127,616      127,616
                    

Total

   $ 1,268,421    $ 971,594    $ 2,240,015
                    

 

9. PROHIBITED TRANSACTIONS

During the Plan year ended December 31, 2009, the Company was delinquent in remitting to the Trustee certain employee contributions totaling $458,066 within the time period set forth in the Department of Labor’s (“DOL”) plan asset regulation at 2510.3-102. As of December 31, 2009 all such delinquent participants’ contributions have been remitted to the Plan. In addition, participants have been credited with the amount of investment that would have been earned had the participant contributions been remitted on a timely basis.

******

 

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Plan Number: 002

EIN: 20-0447089

AB CAR RENTAL SERVICES, INC.

RETIREMENT SAVINGS PLAN FOR BARGAINING HOURLY EMPLOYEES

FORM 5500, SCHEDULE H, PART IV, LINE 4i—SCHEDULE OF ASSETS (HELD AT END OF YEAR)

AS OF DECEMBER 31, 2009

 

 

Identity of Issue, Borrower, Lessor or Similar Party

  

Description of Investment

   Number of
Shares, Units
or Par Value
   Cost ***    Current
Value****

* Avis Budget Group, Inc.

   Common stock    50,892       $ 667,709

* Merrill Lynch Retirement Preservation Trust

   Common/collective trust    15,719,290         14,656,151

    Harding Loevner Emerging Markets Fund

   Common/collective trust    50,406         477,848

    Oppenheimer International Growth Trust

   Common/collective trust    16,717         219,667

* Merrill Lynch Equity Index Trust

   Common/collective trust    13,081         182,743

    PIMCO Total Return Fund

   Registered investment fund    317,475         3,428,735

    Davis NY Venture Fund

   Registered investment fund    59,193         1,852,162

    American Growth Fund

   Registered investment fund    67,468         1,840,539

    The Oakmark Equity and Income Fund

   Registered investment fund    64,966         1,659,219

    ING International Value Fund

   Registered investment fund    100,021         1,144,246

    Oppenheimer Capital Appreciation Fund

   Registered investment fund    24,652         1,024,034

    Allianz CCM Capital Appreciation Fund

   Registered investment fund    64,238         955,855

    MFS Value Fund

   Registered investment fund    41,640         864,871

    Harbor Small Capital Value Fund

   Registered investment fund    40,329         658,968

    Harbor Mid Capital Growth Fund

   Registered investment fund    68,222         478,916

    DWS RREEF Real Estate Fund

   Registered investment fund    18,797         262,216

    Lord Abbett Bond Debenture Fund

   Registered investment fund    34,028         248,744

    Vanguard Explorer Admiral Fund

   Registered investment fund    2,389         127,357

    Columbia Mid Capital Fund

   Registered investment fund    11,212         124,225

* Various participants**

   Participant loans            1,862,977

    Cash and cash equivalents

              10,970
               

Total

            $ 32,748,152
               

 

* Represents a permitted party-in-interest.
** Maturity dates range from January 2010 to February 2020. Interest rates range from 4.25 % to 10.50%.
*** Cost information is not required for participant-directed investments.
**** Form 5500 instructions require reporting of Common/collective trusts at fair value on this schedule.

 

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Plan Number: 002

EIN: 20-0447089

AB CAR RENTAL SERVICES, INC.

RETIREMENT SAVINGS PLAN FOR BARGAINING HOURLY EMPLOYEES

FORM 5500, SCHEDULE H, PART IV, LINE 4A—SCHEDULE OF DELINQUENT PARTICIPANT CONTRIBUTIONS

YEAR ENDED DECEMBER 31, 2009

 

 

Participant contributions
Transferred Late to Plan

   Contributions
Not Corrected
   Contributions
Corrected Outside
of VFCP
   Contributions
Pending Correction
in VFCP
   Total Full Corrected
Under VFCP and
PTE 2002-51
$ 458,066             $ 458,066

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

AB Car Rental Services, Inc.

Retirement Savings Plan

for Bargaining Hourly Employees

By:

 

/s/ Mark Servodidio

  Mark Servodidio
  Executive Vice President,
  Chief Human Resources Officer
  Avis Budget Group, Inc.

Date: June 29, 2010

 

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