ABGI - Employee Savings Plan 2014

 
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, 2014

OR
o
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____            

 


Commission File No. 001-10308

 

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

 

Avis Budget Group, Inc.
Employee Savings Plan

 

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, New Jersey 07054




AVIS BUDGET GROUP, INC. EMPLOYEE SAVINGS PLAN

TABLE OF CONTENTS

 
Page
FINANCIAL STATEMENTS:
 
SUPPLEMENTAL SCHEDULES:
 
EXHIBIT 23.1 – CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - CohnReznick LLP
 

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.




Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Administrator, Trustee and Participants of the
Avis Budget Group, Inc. Employee Savings Plan

We have audited the accompanying statements of net assets available for benefits of the Avis Budget Group, Inc. Employee Savings Plan (the “Plan”) as of December 31, 2014 and 2013, and the related statement of changes in net assets available for benefits for the year ended December 31, 2014. 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 audits.
 
We conducted our audits in accordance with the 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 statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of 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 control over financial reporting. Accordingly, we express no such opinion. An audit 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 audits provide 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 Plan as of December 31, 2014 and 2013, and the changes in its net assets available for benefits for the year ended December 31, 2014 in conformity with accounting principles generally accepted in the United States of America.

The supplemental information in the accompanying schedule of assets (held at end of year) as of December 31, 2014 and the schedule of delinquent participant contributions for the year ended December 31, 2014 have been subjected to audit procedures performed in conjunction with the audit of the Plan's financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part of the financial statements but include supplemental information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedules, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information in the accompanying schedules is fairly stated in all material respects in relation to the financial statements as a whole.


/s/ CohnReznick LLP

Roseland, New Jersey
June 23, 2015



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Table of Contents

AVIS BUDGET GROUP, INC. EMPLOYEE SAVINGS PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2014 AND 2013

 
2014
 
2013
ASSETS:
 
 
 
Participant directed investments at fair value:
 
 
 
Cash and cash equivalents
$
8,268,667

 
$
7,581,000

Mutual funds
293,114,686

 
354,448,661

Common/collective trusts
270,760,001

 
185,207,017

Avis Budget Group, Inc. common stock
47,181,000

 
33,890,650

Total investments
619,324,354

 
581,127,328

 
 
 
 
Receivables:
 
 
 
Notes receivable from participants
11,901,886

 
11,258,730

Participant contributions
413,226

 
590,757

Employer contributions
287,109

 
406,894

Interest and dividends
64

 
21

Total receivables
12,602,285

 
12,256,402

 
 
 
 
NET ASSETS AVAILABLE FOR BENEFITS AT FAIR VALUE
631,926,639

 
593,383,730

 
 
 
 
Adjustments from fair value to contract value for fully benefit-responsive investment contracts
(1,661,972
)
 
(1,003,495
)
 
 
 
 
NET ASSETS AVAILABLE FOR BENEFITS
$
630,264,667

 
$
592,380,235



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



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AVIS BUDGET GROUP, INC. EMPLOYEE SAVINGS PLAN

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2014

ADDITIONS TO NET ASSETS:
 
Net investment income:
 
Dividends
$
25,304,899

Interest
16,177

Net appreciation in fair value of investments
25,106,333

Net investment income
50,427,409

 
 
Interest income on notes receivable from participants
485,090

 
 
Contributions:
 
Participants
21,232,467

Employer
13,561,215

Rollovers
1,665,896

Total contributions
36,459,578

 
 
Net transfers of participant account balances from affiliated plans
4,475,189

 
 
Total additions
91,847,266

 
 
DEDUCTIONS FROM NET ASSETS:
 
Benefits paid to participants
53,856,181

Administrative expenses
106,653

Total deductions
53,962,834

 
 
NET INCREASE IN ASSETS
37,884,432

 
 
NET ASSETS AVAILABLE FOR BENEFITS:
 
BEGINNING OF YEAR
592,380,235

 
 
END OF YEAR
$
630,264,667



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





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AVIS BUDGET GROUP, INC. EMPLOYEE SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS


1.
DESCRIPTION OF THE PLAN

The following description of the Avis Budget Group, Inc. Employee Savings Plan (the “Plan”) provides only general information. Participants should refer to the Summary Plan Description or the Plan document, which are available from Avis Budget Group, Inc. (the “Company”), for a more complete description of the Plan’s provisions.

General – 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, 2013, the Company approved the merger of the AB Car Rental Services, Inc. Retirement Savings Plan into the Plan, which was an affiliated plan of the Company. As of January 1, 2013, their participants and participants' accounts were consolidated into the Plan. The related assets of AB Car Rental Services, Inc. Retirement Savings Plan were transferred into the Plan between January 1, 2013 and April 30, 2013.

Effective January 1, 2014, the Company approved the merger of the Zipcar Inc. 401(k) Plan into the Plan, which was an affiliated plan of the Company. As of January 1, 2014, their participants and participants’ accounts were consolidated into the Plan. The related assets of the Zipcar Inc. 401(k) Plan were transferred into the Plan between July 1, 2014 and July 31, 2014.

The following is a summary of certain Plan provisions:

Eligibility – Each regular employee of the Company (as defined in the Plan document) is eligible to participate in the Plan following the later of commencement of employment or the attainment of age eighteen. Each part-time employee of the Company (as defined in the Plan document) is eligible to participate in the Plan following certain requirements: (i) the attainment of age eighteen and (ii) either 1,000 or more hours of service during the initial twelve consecutive month period of start date ("Year of Eligible Service"), or if the Year of Eligible Service was not met during the initial twelve consecutive month period, a part-time employee of the Company will be admitted into the Plan on the last day of the first plan year once the hours of service requirement has been reached. All eligible employees are automatically enrolled in the Plan at a pre-tax contribution rate of 1% of eligible compensation, as soon as administratively feasible after hire.

Participant Contributions – Participants may elect to make pre-tax contributions up to 50% but not less than 1% of pre-tax annual compensation, up to the statutory maximum of $17,500 for 2014. Certain eligible participants (age 50 and over) are permitted to contribute an additional $5,500 as a catch up contribution, resulting in a maximum pre-tax contribution of $23,000 for 2014. Participants may change their contribution investment direction on a daily basis.

Employer Contributions – Following the completion of one year of employment, the Company makes contributions to the Plan equal to 100% of each eligible participant’s pre-tax salary deferrals up to 6% of such participant’s eligible compensation.

Rollovers – All employees, upon commencement of employment, are provided the option of making a rollover contribution into the Plan in accordance with Internal Revenue Service (“IRS”) regulations.

Investments – Participants direct the investment of contributions to various investment options and may reallocate investments among the various funds. The fund reallocation: (i) must be in 1% increments (if less, the entire amount invested under such option must be reallocated); (ii) must include both employee and employer

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contributions; and (iii) 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 contributions, the Company’s matching contributions and any amounts rolled over to the Plan plus actual earnings thereon. For AB Car Rental Services, Inc. Retirement Savings Plan, the Company's matching contributions that were transferred into the Plan are 100% vested after three years of service. All matching contributions made subsequent to the merger of AB Car Rental Services, Inc. Retirement Savings Plan vest immediately.

Notes Receivable from Participants – Participants actively employed by the Company may borrow, in the form of a loan, from their fund accounts up to the lesser of $50,000, minus their highest outstanding loan balance during the past year or 50% of their vested balance, provided the vested balance is at least $1,000. The initial principal amount of the loan may not be less than $500. The notes are secured by the participant’s vested account balance and bear interest at a rate commensurate to that charged by major financial institutions as determined by the Plan Administrator. Note repayments are made through payroll deductions over a term not to exceed five years, unless the proceeds of the note are used to purchase the principal residence of the participant, in which case the term is not to exceed 15 years. Notes receivable from participants, which are secured by the borrowing participant’s vested balance, are valued at the outstanding principal balance plus any accrued and unpaid interest. Interest income is recorded on the accrual basis. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2014 and 2013. If a participant ceases to make loan repayments and the Plan Administrator deems the participant loan to be in default, the participant loan balance is reduced and a benefit payment is recorded.

Participant Accounts – A separate account is maintained for each participant. Each participant’s account is credited with the participant’s contributions, the Company’s matching 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 and certain administrative expenses. Allocations are based on earnings or 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 – Participants are entitled to withdraw all or any portion of their vested accounts in accordance with the terms of the Plan and applicable law. Participants are permitted to process in-service withdrawals in accordance with Plan provisions upon attaining age 59½ or for hardship in certain circumstances, as defined in the Plan document, before that age. A terminated participant with an account balance of more than $5,000 (excluding any rollover contributions and related earnings thereon) may elect to remain in the Plan and continue to be credited with fund earnings, or receive a lump-sum amount equal to the value of the participant’s vested interest in his or her account. A terminated participant with an account balance of $5,000 or less will automatically receive a lump-sum distribution.

Forfeited Accounts – Forfeited balances of terminated participants’ non-vested accounts are used to reduce employer contributions. As of December 31, 2014 and 2013, forfeited account balances amounted to $3,739 and $7,918, respectively. During 2014, $77,158 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.

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting – The accompanying financial statements have been prepared on the accrual basis of accounting 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 Pension 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, which the Plan classifies as follows: (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 (iii) Level 3, which refers to securities valued based on significant unobservable inputs. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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.

One of the Plan’s current common/collective trust investments is the Wells Fargo Stable Return Fund. The Wells Fargo Stable Return Fund invests in investment contracts issued by highly rated companies. These include Guaranteed Investment Contracts (“GICs”), wrapped portfolios of fixed income investments (“synthetic GICs”) and cash equivalents. Traditional GICs are unsecured, general account obligations of insurance companies or banks and are collateralized by the assets of the insurance company or bank. A security-backed contract consists of a portfolio of securities 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 be 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 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

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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 the employer or plan. As of December 31, 2014, the Plan Administrator does not believe that the occurrence of an event that would limit the Wells Fargo Stable Return Fund’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 $119,057,023 and $125,137,908 at December 31, 2014 and 2013, respectively. The average yield earned by the Wells Fargo Stable Return Fund calculated based on the change in the net asset value between the beginning and the end of the year was 1.40% and 1.36% for the years ended December 31, 2014 and 2013, respectively. The average yield earned with an adjustment to reflect the actual interest rate credited to participants was 1.64% and 1.52% for the years ended December 31, 2014 and 2013, 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, 2014, 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 paid 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 distributions from the Plan, totaled $557,688 and $581,286 at December 31, 2014 and 2013, respectively.


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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:
 
2014
Wells Fargo Stable Return Fund
$
119,057,023

SSGA S&P 500 Index Fund
68,741,753

The Oakmark Equity and Income Fund
60,218,576

American Growth Fund of America
50,297,211

Federated Total Return Bond Fund
48,625,989

Avis Budget Group, Inc. common stock (a)
47,181,000

Northern Trust Extended Equity Market Fund
41,841,155

____________
(a)  
Permitted party-in-interest

 
2013
Wells Fargo Stable Return Fund
$
125,137,908

PIMCO Total Return Fund
51,547,683

The Oakmark Equity and Income Fund
50,864,673

American Growth Fund of America
47,822,021

Avis Budget Group, Inc. common stock (a)
33,890,650

Davis NY Venture Fund
32,611,420

Harbor Small Cap Value Fund
31,306,278

SSGA S&P 500 Index Fund
30,451,496

____________
(a)  
Permitted party-in-interest

During 2014, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in fair value, as follows:
 
2014
Common stock (a)
$
20,148,774

Common/collective trusts
4,500,786

Mutual funds
456,773

 
$
25,106,333

____________
(a) 
Consists of common stock of Avis Budget Group, Inc.

4.
FEDERAL INCOME TAX STATUS
The IRS determined and informed the Company by letter dated October 6, 2014 that the Plan and related trust are designed in accordance with applicable sections of the IRC. Therefore, no provision for income taxes has been included in the Plan's financial statements.

U.S. GAAP requires Plan management to evaluate uncertain tax positions taken by the Plan and recognize a tax liability if the organization has taken an uncertain tax position that more likely than not would not be sustained upon examination by the IRS. The Plan is currently under examination by the IRS for the 2011 plan year. The examination is ongoing and Plan management is responding to all requests. The Plan Administrator believes the Plan is no longer subject to income tax examinations for years prior to 2011.


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5.
EXEMPT PARTY-IN-INTEREST TRANSACTIONS
Loans to participants qualify as party-in-interest transactions.

At December 31, 2014 and 2013, the Plan held 711,307 and 838,462 shares, respectively, of Avis Budget Group, Inc. common stock with a cost basis of $29,946,934 and $14,964,137, respectively. During 2014 and 2013, the Plan did not receive dividend income from Avis Budget Group, Inc., which is the sponsoring employer of the Plan.

6.
PLAN TERMINATION
Although the Company has not expressed any intention to do so, the Company reserves the right to modify, suspend, amend or terminate the Plan in whole or in part at any time subject to the provisions of ERISA.

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:
 
 
2014
 
2013
Net assets available for benefits per the financial statements
$
630,264,667

 
$
592,380,235

Less:
Amounts allocated to withdrawing participants
(557,688
)
 
(581,286
)
Add:
Adjustments from contract value to fair value for fully benefit-responsive investment contracts
1,661,972

 
1,003,495

Net assets available for benefits per Form 5500
$
631,368,951

 
$
592,802,444


The following is a reconciliation of benefits paid to participants per the financial statements for the year ended December 31, 2014 to Form 5500:
Benefits paid to participants per the financial statements
$
53,856,181

Less:
Amounts allocated to withdrawing participants at December 31, 2013
(581,286
)
 
Certain deemed distributions of notes receivable from participants
(660,605
)
Add:
Amounts allocated to withdrawing participants at December 31, 2014
557,688

Benefits paid to participants per Form 5500
$
53,171,978


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, 2014, 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, 2014 to the net income per Form 5500:
Increase in net assets available for benefits per the financial statements
$
37,884,432

Less:
Amounts allocated to withdrawing participants at December 31, 2014
(557,688
)
 
December 31, 2013 adjustment from contract value to fair value for fully benefit-responsive investment contracts
(1,003,495
)
 
Net transfer of assets to the Plan (Reflected in Line L-Transfer of assets of Form 5500)
(4,475,189
)
Add:
Amounts allocated to withdrawing participants at December 31, 2013
581,286

 
December 31, 2014 adjustment from contract value to fair value for fully benefit-responsive investment contracts
1,661,972

Net income per Form 5500
$
34,091,318




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8.
FAIR VALUE MEASUREMENTS
The Plan measures certain financial assets and liabilities at fair value. The asset 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. See Note 2-Summary of Significant Accounting Policies for the Plan’s valuation methodology used to measure fair value.

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, 2014 and 2013.

Avis Budget Group, Inc. common stock – The fair value of Avis Budget Group, Inc. 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.

Mutual funds – Valued at the net asset value (“NAV”) of shares held by the Plan at year end. NAV is derived by the quoted prices of underlying investments and are classified as Level 1.

Common/collective trusts – are valued based on the 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. There are no redemption restrictions on the participant’s holdings in these investments. These assets are classified as Level 2.

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 table sets forth by level, within the fair value hierarchy, the Plan’s investments at fair value as of December 31, 2014:
Asset Class________
Level 1
 
Level 2
 
Total
Common stock
$
47,181,000

 
$

 
$
47,181,000

Mutual funds:
 
 
 
 
 
Large-cap growth
71,008,314

 

 
71,008,314

Large-cap value
26,401,204

 

 
26,401,204

Large-cap blend
60,218,576

 

 
60,218,576

Small-cap growth
12,289,685

 

 
12,289,685

Small-cap blend
28,095,164

 

 
28,095,164

Foreign large-cap blend
20,156,380

 

 
20,156,380

Bond funds
60,121,862

 

 
60,121,862

Real estate
14,823,501

 

 
14,823,501

Common/collective trusts:
 
 
 
 
 
Large-cap blend

 
68,741,753

 
68,741,753

Mid-cap growth

 
41,841,155

 
41,841,155

Foreign large-cap blend

 
24,530,507

 
24,530,507

Bond funds

 
6,607,808

 
6,607,808

Emerging markets

 
9,981,755

 
9,981,755

Short-term investments

 
119,057,023

 
119,057,023

Total
$
340,295,686

 
$
270,760,001

 
$
611,055,687


The following table sets forth by level, within the fair value hierarchy, the Plan’s investments at fair value as of December 31, 2013:
Asset Class________
Level 1
 
Level 2
 
Total
Common stock
$
33,890,650

 
$

 
$
33,890,650

Mutual funds:
 
 
 
 
 
Large-cap growth
66,900,082

 

 
66,900,082

Large-cap value
24,486,754

 

 
24,486,754

Large-cap blend
83,476,093

 

 
83,476,093

Mid-cap growth
14,622,315

 

 
14,622,315

Mid-cap value
22,221,220

 

 
22,221,220

Small-cap growth
11,863,543

 

 
11,863,543

Small-cap blend
31,306,278

 

 
31,306,278

Foreign large-cap blend
27,794,556

 

 
27,794,556

Bond funds
60,486,351

 

 
60,486,351

Real estate
11,291,469

 

 
11,291,469

Common/collective trusts:
 
 
 
 
 
Large-cap blend

 
30,451,496

 
30,451,496

Foreign large-cap growth

 
18,686,765

 
18,686,765

Emerging markets

 
10,930,848

 
10,930,848

Short-term investments

 
125,137,908

 
125,137,908

Total
$
388,339,311

 
$
185,207,017

 
$
573,546,328



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9.
NONEXEMPT TRANSACTIONS

As reported on the supplemental schedule of delinquent participant contributions (Schedule H, Line 4a), certain Plan contributions were not remitted to the trust within the time frame specified by the Department of Labor's Regulation 29 (CFR 2510.3-102), thus constituting nonexempt transactions between the Plan and the Company for the year ended December 31, 2014.

******

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Plan Number: 002
 
EIN: 06-0918165
AVIS BUDGET GROUP, INC. EMPLOYEE SAVINGS PLAN
 
FORM 5500, SCHEDULE H, PART IV, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2014

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
 
711,307

 
 
 
$
47,181,000

Wells Fargo Stable Return Fund
 
Common/collective trust
 
2,331,177

 
 
 
119,057,023

SSGA S&P 500 Index Fund
 
Common/collective trust
 
3,822,171

 
 
 
68,741,753

Northern Trust Extended Equity Market Fund
 
Common/collective trust
 
410,368

 
 
 
41,841,155

Oppenheimer International Growth Trust
 
Common/collective trust
 
1,064,241

 
 
 
21,348,675

Harding Loevner Emerging Markets Fund
 
Common/collective trust
 
825,621

 
 
 
9,981,755

BlackRock US Debt Index Fund
 
Common/collective trust
 
330,815

 
 
 
6,607,808

Northern Trust Collective All Country World Ex-US Index Fund
 
Common/collective trust
 
22,807

 
 
 
3,181,832

The Oakmark Equity and Income Fund
 
Registered investment fund
 
1,887,138

 
 
 
60,218,576

American Growth Fund of America
 
Registered investment fund
 
1,179,855

 
 
 
50,297,211

Federated Total Return Bond Fund
 
Registered investment fund
 
4,404,528

 
 
 
48,625,989

Harbor Small Cap Value Fund
 
Registered investment fund
 
1,052,253

 
 
 
28,095,164

MFS Value Fund
 
Registered investment fund
 
755,615

 
 
 
26,401,204

Prudential Jennison Growth Fund
 
Registered investment fund
 
685,344

 
 
 
20,711,103

Harbor International Fund
 
Registered investment fund
 
311,151

 
 
 
20,156,380

Deutsche Real Estate Fund
 
Registered investment fund
 
628,114

 
 
 
14,823,501

Vanguard Explorer Admiral Fund
 
Registered investment fund
 
142,159

 
 
 
12,289,685

Lord Abbett Bond Debenture Fund
 
Registered investment fund
 
1,005,626

 
 
 
7,934,392

Vanguard Inflation-Protected Securities Fund
 
Registered investment fund
 
137,668

 
 
 
3,561,481

* Various participants**
 
Participant loans
 
 
 
 
 
11,901,886

Cash and cash equivalents
 
 
 
 
 
 
 
8,268,667

Total
 
 
 
 
 
 
 
$
631,226,240

__________
*
Represents a permitted party-in-interest
**
Maturity dates range from January 2015 to October 2029. 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.


See Report of Independent Registered Public Accounting Firm.

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Plan Number: 002
 
EIN: 06-0918165
AVIS BUDGET GROUP, INC. EMPLOYEE SAVINGS PLAN
 
FORM 5500, SCHEDULE H, PART IV, LINE 4a - SCHEDULE OF DELINQUENT PARTICIPANT
CONTRIBUTIONS FOR THE YEAR ENDED DECEMBER 31, 2014
Participant Contributions Transferred Late to Plan
 
Total that Constitute Nonexempt Prohibited transactions
 
Total Fully Corrected Under VFCP and PTE 2002-51
 
Contributions Not Corrected
 
Contributions Corrected Outside of VFCP
 
Contributions Pending Correction in VFCP
 
$
6,010,371

 
$

 
$

 
$
3,801,591

 
$
2,208,780

 
 
 
 
 
 
 
 
 
Check here if Late Participant Loan Repayments are included: o


See Report of Independent Registered Public Accounting Firm.


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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.


Avis Budget Group, Inc. Employee Savings Plan

By:     /s/ Edward P. Linnen     
Edward P. Linnen
Executive Vice President and Chief Human Resources Officer
Avis Budget Group, Inc.

Date: June 23, 2015

15
Exhibit 23.1 ABGI 2014


Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements No. 333-98933, No. 333-114744 and No. 333-58670 on Form S-8 of our report dated June 23, 2015 relating to the Avis Budget Group, Inc. Employee Savings Plan statements of net assets available for benefits as of December 31, 2014 and 2013 and the related statement of changes in net assets available for benefits for the year ended December 31, 2014, which appear in this Annual Report on Form 11-K.
                

/s/ CohnReznick LLP
Roseland, New Jersey
June 23, 2015