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This excerpt taken from the PBG 8-K filed Sep 16, 2009. Unfunded Deferred Compensation
Liability – Our unfunded deferred
compensation liability is subject to changes in our stock price
as well as
33
Table of Contents
price changes in other equity and fixed-income investments.
Participating employees in our deferred compensation program can
elect to defer all or a portion of their compensation to be paid
out on a future date or dates. As part of the deferral process,
employees select from phantom investment options that determine
the earnings on the deferred compensation liability and the
amount that they will ultimately receive. Employee investment
elections include PBG stock and a variety of other equity and
fixed-income investment options.
Since the plan is unfunded, employees’ deferred
compensation amounts are not directly invested in these
investment vehicles. Instead, we track the performance of each
employee’s investment selections and adjust his or her
deferred compensation account accordingly. The adjustments to
employees’ accounts increases or decreases the deferred
compensation liability reflected on our Consolidated Balance
Sheets with an offsetting increase or decrease to our selling,
delivery and administrative expenses.
We use prepaid forward contracts to hedge the portion of our
deferred compensation liability that is based on our stock
price. At December 27, 2008, we had a prepaid forward
contract for 585,000 shares at a price of $22.00, which was
accounted for as an economic hedge. This contract requires cash
settlement and has a fair value at December 27, 2008, of
$13 million recorded in prepaid expenses and other current
assets in our Consolidated Balance Sheet. The fair value of this
contract changes based on the change in our stock price compared
with the contract exercise price. We recognized an expense of
$10 million and income of $5 million in 2008 and 2007,
respectively, resulting from the change in fair value of these
prepaid forward contracts. The earnings impact from these
instruments is recorded in selling, delivery and administrative
expenses.
These excerpts taken from the PBG 10-K filed Feb 20, 2009. Unfunded
Deferred Compensation Liability
Our unfunded deferred compensation liability is subject to
changes in our stock price, as well as price changes in certain
other equity and fixed-income investments. Employee investment
elections include PBG stock and a variety of other equity and
fixed-income investment options. Since the plan is unfunded,
employees’ deferred compensation amounts are not directly
invested in these investment vehicles. Instead, we track the
performance of each employee’s investment selections and
adjust the employee’s deferred compensation account
accordingly. The adjustments to the employees’ accounts
increases or decreases the deferred compensation liability
reflected on our Consolidated Balance Sheet with an offsetting
increase or decrease to our selling, delivery and administrative
expenses in our Consolidated Statements of Operations. We use
prepaid forward contracts to hedge the portion of our deferred
compensation liability that is based on our stock price.
Therefore, changes in compensation expense as a result of
changes in our stock price are substantially offset by the
changes in the fair value of these contracts. We estimate that a
10 percent unfavorable change in the year-end stock price
would have reduced the fair value from these forward contract
commitments by $1 million and $2 million at
December 27, 2008 and December 29, 2007, respectively.
Unfunded Deferred Compensation Liability Our unfunded deferred compensation liability is subject to changes in our stock price, as well as price changes in certain other equity and fixed-income investments. Employee investment elections include PBG stock and a variety of other equity and fixed-income investment options. Since the plan is unfunded, employees’ deferred compensation amounts are not directly invested in these investment vehicles. Instead, we track the performance of each employee’s investment selections and adjust the employee’s deferred compensation account accordingly. The adjustments to the employees’ accounts increases or decreases the deferred compensation liability reflected on our Consolidated Balance Sheet with an offsetting increase or decrease to our selling, delivery and administrative expenses in our Consolidated Statements of Operations. We use prepaid forward contracts to hedge the portion of our deferred compensation liability that is based on our stock price. Therefore, changes in compensation expense as a result of changes in our stock price are substantially offset by the changes in the fair value of these contracts. We estimate that a 10 percent unfavorable change in the year-end stock price would have reduced the fair value from these forward contract commitments by $1 million and $2 million at December 27, 2008 and December 29, 2007, respectively. Unfunded Deferred Compensation
Liability – Our unfunded deferred
compensation liability is subject to changes in our stock price
as well as
45
Table of Contents
price changes in other equity and fixed-income investments.
Participating employees in our deferred compensation program can
elect to defer all or a portion of their compensation to be paid
out on a future date or dates. As part of the deferral process,
employees select from phantom investment options that determine
the earnings on the deferred compensation liability and the
amount that they will ultimately receive. Employee investment
elections include PBG stock and a variety of other equity and
fixed-income investment options.
Since the plan is unfunded, employees’ deferred
compensation amounts are not directly invested in these
investment vehicles. Instead, we track the performance of each
employee’s investment selections and adjust his or her
deferred compensation account accordingly. The adjustments to
employees’ accounts increases or decreases the deferred
compensation liability reflected on our Consolidated Balance
Sheets with an offsetting increase or decrease to our selling,
delivery and administrative expenses.
We use prepaid forward contracts to hedge the portion of our
deferred compensation liability that is based on our stock
price. At December 27, 2008, we had a prepaid forward
contract for 585,000 shares at a price of $22.00, which was
accounted for as an economic hedge. This contract requires cash
settlement and has a fair value at December 27, 2008, of
$13 million recorded in prepaid expenses and other current
assets in our Consolidated Balance Sheet. The fair value of this
contract changes based on the change in our stock price compared
with the contract exercise price. We recognized an expense of
$10 million and income of $5 million in 2008 and 2007,
respectively, resulting from the change in fair value of these
prepaid forward contracts. The earnings impact from these
instruments is recorded in selling, delivery and administrative
expenses.
Unfunded Deferred Compensation Liability – Our unfunded deferred compensation liability is subject to changes in our stock price as well as 45 Table of Contents
price changes in other equity and fixed-income investments. Participating employees in our deferred compensation program can elect to defer all or a portion of their compensation to be paid out on a future date or dates. As part of the deferral process, employees select from phantom investment options that determine the earnings on the deferred compensation liability and the amount that they will ultimately receive. Employee investment elections include PBG stock and a variety of other equity and fixed-income investment options. Since the plan is unfunded, employees’ deferred compensation amounts are not directly invested in these investment vehicles. Instead, we track the performance of each employee’s investment selections and adjust his or her deferred compensation account accordingly. The adjustments to employees’ accounts increases or decreases the deferred compensation liability reflected on our Consolidated Balance Sheets with an offsetting increase or decrease to our selling, delivery and administrative expenses. We use prepaid forward contracts to hedge the portion of our deferred compensation liability that is based on our stock price. At December 27, 2008, we had a prepaid forward contract for 585,000 shares at a price of $22.00, which was accounted for as an economic hedge. This contract requires cash settlement and has a fair value at December 27, 2008, of $13 million recorded in prepaid expenses and other current assets in our Consolidated Balance Sheet. The fair value of this contract changes based on the change in our stock price compared with the contract exercise price. We recognized an expense of $10 million and income of $5 million in 2008 and 2007, respectively, resulting from the change in fair value of these prepaid forward contracts. The earnings impact from these instruments is recorded in selling, delivery and administrative expenses. These excerpts taken from the PBG 10-K filed Feb 27, 2008. Unfunded Deferred Compensation
Liability – Our unfunded deferred
compensation liability is subject to changes in our stock price
as well as price changes in other equity and fixed-income
investments. Participating employees in our deferred
compensation program can elect to defer all or a portion of
their compensation to be paid out on a future date or dates. As
part of the deferral process, employees select from phantom
investment options that determine the earnings on the deferred
compensation liability and the amount that they will ultimately
receive. Employee investment elections include PBG stock and a
variety of other equity and fixed-income investment options.
Since the plan is unfunded, employees’ deferred
compensation amounts are not directly invested in these
investment vehicles. Instead, we track the performance of each
employee’s investment selections and adjust his or her
deferred compensation account accordingly. The adjustments to
employees’ accounts increases or decreases the deferred
compensation liability reflected on our Consolidated Balance
Sheets with an offsetting increase or decrease to our selling,
delivery and administrative expenses.
We use prepaid forward contracts to hedge the portion of our
deferred compensation liability that is based on our stock
price. At December 29, 2007, we had a prepaid forward
contract for 610,000 shares at a price of $41.37, which was
accounted for as an economic hedge. This contract requires cash
settlement and has a fair value at December 29, 2007, of
$24 million recorded in prepaid expenses and other current
assets in our Consolidated Balance Sheet. The fair value of this
contract changes based on the change in our stock price compared
with the contract exercise price. We recognized income of
$5 million and $2 million in 2007 and 2006,
respectively, resulting from the change in fair value of these
prepaid forward contracts. The earnings impact from these
instruments is recorded in selling, delivery and administrative
expenses.
Unfunded Deferred Compensation Liability – Our unfunded deferred compensation liability is subject to changes in our stock price as well as price changes in other equity and fixed-income investments. Participating employees in our deferred compensation program can elect to defer all or a portion of their compensation to be paid out on a future date or dates. As part of the deferral process, employees select from phantom investment options that determine the earnings on the deferred compensation liability and the amount that they will ultimately receive. Employee investment elections include PBG stock and a variety of other equity and fixed-income investment options. Since the plan is unfunded, employees’ deferred compensation amounts are not directly invested in these investment vehicles. Instead, we track the performance of each employee’s investment selections and adjust his or her deferred compensation account accordingly. The adjustments to employees’ accounts increases or decreases the deferred compensation liability reflected on our Consolidated Balance Sheets with an offsetting increase or decrease to our selling, delivery and administrative expenses. We use prepaid forward contracts to hedge the portion of our deferred compensation liability that is based on our stock price. At December 29, 2007, we had a prepaid forward contract for 610,000 shares at a price of $41.37, which was accounted for as an economic hedge. This contract requires cash settlement and has a fair value at December 29, 2007, of $24 million recorded in prepaid expenses and other current assets in our Consolidated Balance Sheet. The fair value of this contract changes based on the change in our stock price compared with the contract exercise price. We recognized income of $5 million and $2 million in 2007 and 2006, respectively, resulting from the change in fair value of these prepaid forward contracts. The earnings impact from these instruments is recorded in selling, delivery and administrative expenses. | EXCERPTS ON THIS PAGE:
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