Freddie Mac 2005 Annual Report Download - page 156

Download and view the complete annual report

Please find page 156 of the 2005 Freddie Mac annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 171

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171

$28 million for the years ended December 31, 2005, 2004 and 2003, respectively, related to these plans. These expenses were
included in Salaries and employee beneÑts on our consolidated statements of income.
See ""NOTE 13: LEGAL CONTINGENCIES'' for more information regarding civil litigation and a Department of
Labor investigation of our Savings Plan in relation to our restatement.
Executive Deferred Compensation Plan
Our Executive Deferred Compensation Plan is an unfunded, non-qualiÑed plan that allows certain key employees to
elect to defer substantially all or a portion of their annual salary and cash bonus, and certain key management employees to
defer the settlement of restricted stock units received from us, as well as substantially all or a portion of their annual salary
and cash bonus, for any number of years speciÑed by the employee, but under no circumstances may the period elected
exceed his or her life expectancy. During 2005, we amended the plan to modify certain provisions to comply with Internal
Revenue Code Section 409A as a result of the issuance of proposed regulations and other guidance. Distributions are paid
from our general assets. We record a liability equal to the accumulated deferred salary, cash bonus and accrued interest as
set forth in the plan, net of any related distributions made to plan participants. We recognize expense equal to the interest
accrued on deferred salary and bonus throughout the year. Expense associated with unvested deferred restricted stock units
is recognized as part of stock-based compensation.
NOTE 16: FAIR VALUE DISCLOSURES
The supplemental consolidated fair value balance sheets in Table 16.1 present our estimates of the fair value of our
recorded Ñnancial assets and liabilities and oÅ-balance sheet Ñnancial instruments at December 31, 2005 and 2004. Our
consolidated fair value balance sheets include the estimated fair values of Ñnancial instruments recorded in our
consolidated balance sheets prepared in accordance with GAAP, as well as oÅ-balance sheet Ñnancial instruments that
represent our assets or liabilities that are not recorded in our GAAP consolidated balance sheets. These oÅ-balance sheet
items predominantly consist of: (a) the unrecognized Guarantee asset and Guarantee obligation associated with our PCs
issued through our Guarantor Swap program prior to the implementation of FIN 45, (b) commitments to purchase
multifamily and single-family mortgage loans that will be classiÑed as held-for-investment in our GAAP consolidated
Ñnancial statements and (c) certain credit enhancements on manufactured housing asset-backed securities. The valuations
of Ñnancial instruments on our consolidated fair value balance sheets are in accordance with GAAP fair value guidelines
prescribed by SFAS No. 107, ""Disclosures about Fair Value of Financial Instruments,'' or SFAS 107, and other relevant
pronouncements.
140 Freddie Mac