What were the non-current liabilities related to Budget's pension plans as of December 31, 2023?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
| As of December 31, | |||||||
|---|---|---|---|---|---|---|---|
| 20 | 2023 | ||||||
| Change in Benefit Obligation | $ | 620 $ | 575 | ||||
| Benefit obligation at end of prior year | • | 3 | 3 | ||||
| Service cost | 28 | 27 | |||||
| Interest cost | (43) | 30 | |||||
| Actuarial (gain) loss | (1) | _ | |||||
| Plan amendments | (11) | 15 | |||||
| Currency translation adjustment | (31) | (30) | |||||
| Net benefits paid | $ | 565 $ | 620 | ||||
| Benefit obligation at end of current year | |||||||
| Change in Plan Assets | _ | ^ | E14 | ||||
| Fair value of assets at end of prior year | $ | 540 $ | 514 35 | ||||
| Actual return on plan assets | 3 | 6 | |||||
| Employer contributions | 4 | 15 | |||||
| Currency translation adjustment | (6) | (30) | |||||
| Net benefits paid | (31) | 540 | |||||
| Fair value of assets at end of current year | $ | 510 $ | 540 | ||||
| Amounts recognized in the statement of financial position consist of the following: | As of December 31, | ||||||
| Funded Status | 20 | )24 | 2023 | ||||
| Classification of net balance sheet assets (liabilities): | : | ||||||
| Non-current assets |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, as of December 31, 2023, the non-current liabilities related to its pension plans were $(100) million. This figure represents the company's obligations to its employees' pension plans that are not expected to be paid within the next year. It is important to note that this is a net liability, meaning it takes into account the assets already held within the pension plans.
For a prospective Budget franchisee, understanding these pension liabilities is crucial because they reflect the overall financial health and stability of the company. While franchisees are not directly responsible for these liabilities, they can impact the franchisor's ability to invest in growth, support franchisees, or maintain brand standards. A large pension liability could indicate potential financial strain on the company, which could indirectly affect franchisees.
The FDD also provides additional context regarding Budget's pension plans, including changes in benefit obligations, plan assets, and actuarial assumptions. These details can help a potential franchisee assess the long-term sustainability of the company's pension obligations and its potential impact on the company's financial performance. Reviewing these figures in comparison to previous years can reveal trends and provide a more comprehensive understanding of the company's financial position.
It is also worth noting that pension liabilities are a common consideration for many large corporations, and the specific amount can vary significantly depending on factors such as the size of the company, the demographics of its workforce, and the investment performance of its pension plans. Prospective franchisees should consider these liabilities in the context of Budget's overall financial situation and industry benchmarks.