JP Morgan Chase 2006 Annual Report Download - page 104

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JPMorgan Chase & Co.
102 JPMorgan Chase & Co. / 2006 Annual Report
The following tables present the components of net periodic benefit costs reported in the Consolidated statements of income for the Firm’s U.S. and non-U.S.
defined benefit pension and OPEB plans:
Defined benefit pension plans
U.S. Non-U.S. OPEB plans(e)
Year ended December 31, (in millions) 2006 2005(b) 2004(b)(c)(d) 2006 2005 2004(c)(d) 2006 2005 2004(c)(d)
Components of net periodic benefit cost
Benefits earned during the period $ 281 $ 293 $ 271 $37 $25 $17 $9 $13 $15
Interest cost on benefit obligations 452 453 368 120 104 87 78 81 81
Expected return on plan assets (692) (694) (556) (122) (109) (90) (93) (90) (86)
Amortization:
Net actuarial loss 12 424 45 38 44 29 12 —
Prior service cost (credit) 5514 —11(19) (10) —
Curtailment (gain) loss 238 1—— 2(17) 8
Settlement (gain) loss ——— 4— (1) ———
Special termination benefits ——— 1—11 212
Subtotal 60 64 129 86 59 69 8(10) 20
Other defined benefit pension plans
(a) 231 36 39 24 NA NA NA
Total defined benefit plans 62 67 130 122 98 93 NA NA NA
Total defined contribution plans 254 237 187 199 155 130 NA NA NA
Total pension and OPEB cost included in
Compensation expense $ 316 $ 304 $ 317 $ 321 $ 253 $ 223 $8 $ (10) $ 20
(a) Includes immaterial non-U.S. defined benefit pension plans.
(b) Revised primarily to incorporate amounts related to the U.S. defined benefit pension plans not subject to Title IV of the Employee Retirement Income Security Act of 1974 (e.g., Excess Retirement Plan).
(c) Effective July 1, 2004, the Firm assumed the obligations of heritage Bank One's pension and OPEB plans. These plans were similar to those of heritage JPMorgan Chase. The heritage Bank One plans
were merged into the JPMorgan Chase plans effective December 31, 2004.
(d) 2004 results include six months of the combined Firm’s results and six months of the heritage JPMorgan Chase results.
(e) The Medicare Prescription Drug, Improvement and Modernization Act of 2003 resulted in a reduction of $32 million, $15 million and $5 million in 2006, 2005 and 2004, respectively, in net periodic
benefit cost. The impact on 2006 and 2005 costs were higher as a result of the final Medicare Part D regulations issued on January 21, 2005, which were reflected beginning as of August 1, 2005,
the next measurement date for the plan.
The following table presents the incremental effect of applying SFAS 158 on individual line items on the Consolidated balance sheets:
Before application SFAS 158 After application
December 31, 2006 (in millions) of SFAS 158 adjustments of SFAS 158
Line item
Other assets $ 53,328 $ (1,563) $ 51,765(a)
Total assets 1,353,083 (1,563) 1,351,520
Accounts payable, accrued expenses and other liabilities 88,557 (461) 88,096(b)
Total liabilities 1,236,191 (461) 1,235,730
Accumulated other comprehensive income (loss) (455) (1,102) (1,557)
Total liabilities and stockholders’ equity 1,353,083 (1,563) 1,351,520
(a) Includes overfunded defined benefit pension and OPEB plans of $2.3 billion.
(b) Includes underfunded defined benefit pension and OPEB plans of $596 million.
The estimated amounts that will be amortized from AOCI into net periodic benefit cost, before tax, in 2007 are as follows:
Defined benefit pension plans OPEB plans
Year ended December 31, 2007 (in millions) U.S. Non-U.S. U.S. Non-U.S.
Net actuarial loss $— $52 $34 $—
Prior service cost (credit) 5 — (16) —
Total $5 $52 $18 $—