Cisco 2008 Annual Report Download - page 72

2008 Annual Report 77
Notes to Consolidated Financial Statements
(d) Deferred Compensation Plans
The Company maintains a deferred compensation plan for certain employees and directors of Scientific-Atlanta (the “SA Plan”). The
deferred compensation liability under the SA Plan was approximately $126 million and $109 million, as of July 26, 2008 and July 28, 2007,
respectively, and was recorded in current and long-term liabilities.
The Cisco Systems, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”), a nonqualified deferred compensation
plan, became effective June 25, 2007. As required by applicable law, participation in the Deferred Compensation Plan is limited to a group
of the Company’s management employees, which group includes each of the Company’s named executive officers. Under the Deferred
Compensation Plan, which is an unfunded and unsecured deferred compensation arrangement, a participant may elect to defer base
salary, bonus, and/or commissions, pursuant to such rules as may be established by the Company, up to the maximum percentages for
each deferral election as described in the plan. This operates in a manner similar to the way in which the Company’s 401(k) plan operates,
but without regard to the maximum deferral limitations imposed on 401(k) plans by the Internal Revenue Code. The Company may also, at
its discretion, make a matching contribution to the employee under the Deferred Compensation Plan. A matching contribution equal to 4%
of eligible compensation over the Internal Revenue Code limit for calendar year 2008 that is deferred by participants under the Deferred
Compensation Plan will be made to eligible participants’ accounts at the end of calendar year 2008. The deferred compensation liability
under this plan was approximately $45 million as of July 26, 2008 and was recorded in long-term liabilities.
(e) Defined Benefit Plans Assumed from Scientific-Atlanta
Upon completion of the acquisition of Scientific-Atlanta, the Company assumed certain defined benefit plans related to employee
pensions. Scientific-Atlanta had a defined benefit pension plan covering substantially all of its domestic employees, defined benefit
pension plans covering certain international employees, a restoration retirement plan for certain domestic employees, and supplemental
executive retirement plans for certain key officers (collectively, the “Pension Plans”).
The fair value of the liabilities of these plans was determined as of the July 26, 2008 and July 28, 2007 measurement dates. The fair
value determination of the liabilities reflects the Company’s intent to integrate the Scientific-Atlanta employee benefit programs with those
of the Company. As a result, no additional benefits have been accrued under the Pension Plans since February 2008.
The following table sets forth projected benefit obligations, plan assets, and amounts recorded in current and long-term liabilities
under the Pension Plans (in millions):
July 26, 2008 July 28, 2007
Projected benefit obligations $ 199 $ 234
Fair value of plan assets (109) (125)
Accrued benefit liability $ 90 $ 109
The accumulated benefit obligations under the Pension Plans were $197 million and $225 million as of July 26, 2008 and July 28, 2007,
respectively.