JP Morgan Chase 2008 Annual Report Download - page 210

Notes to consolidated financial statements
208 JPMorgan Chase & Co./ 2008 Annual Report
Note 27 – Accumulated other comprehensive income (loss)
Accumulated other comprehensive income (loss) includes the after-tax change in unrealized gains and losses on AFS securities, SFAS 52 foreign
currency translation adjustments (including the impact of related derivatives), SFAS 133 cash flow hedging activities and SFAS 158 net loss and
prior service cost (credit) related to the Firm’s defined benefit pension and OPEB plans.
Net loss and prior Accumulated
Translation service costs (credit) of other
Unrealized gains (losses) adjustments, Cash defined benefit pension comprehensive
(in millions) on AFS securities(a) net of hedges flow hedges and OPEB plans(e) income (loss)
Balance at December 31, 2005 $ (224) $ (8) $ (394) $ — $ (626)
Net change 253(b) 13 (95) — 171
Adjustment to initially apply
SFAS 158, net of taxes — — — (1,102) (1,102)
Balance at December 31, 2006 29 5 (489) (1,102) (1,557)
Cumulative effect of changes in
accounting principles (SFAS 159) (1) — — — (1)
Balance at January 1, 2007, adjusted 28 5 (489) (1,102) (1,558)
Net change 352(c) 3 (313) 599 641
Balance at December 31, 2007 380 8 (802) (503) (917)
Net change (2,481)(d) (606) 600 (2,283) (4,770)
Balance at December 31, 2008 $ (2,101) $ (598) $ (202) $ (2,786) $ (5,687)
(a) Represents the after-tax difference between the fair value and amortized cost of the AFS securities portfolio and retained interests in securitizations recorded in other assets.
(b) The net change during 2006 was due primarily to the reversal of unrealized losses from securities sales.
(c) The net change during 2007 was due primarily to a decline in interest rates.
(d) The net change during 2008 was due primarily to spread widening in credit card asset-backed securities, non-agency mortgage-backed securities and collateralized loan obligations.
(e) For further discussion of SFAS 158, see Note 9 on pages 161–167 of this Annual Report.
The following table presents the after-tax changes in net unrealized gains (losses); and reclassification adjustments for realized (gains) losses on
AFS securities and cash flow hedges; changes resulting from foreign currency translation adjustments (including the impact of related derivatives);
net gains (losses) and prior service costs from pension and OPEB plans; and amortization of pension and OPEB amounts into net income. The
table also reflects the adjustment to accumulated other comprehensive income (loss) resulting from the initial application of SFAS 158 to the
Firm’s defined benefit pension and OPEB plans. Reclassification adjustments include amounts recognized in net income that had been recorded
previously in other comprehensive income (loss).
2008 2007 2006
Before Tax After Before Tax After Before Tax After
Year ended December 31, (in millions) tax effect tax tax effect tax tax effect tax
Unrealized gains (losses) on AFS securities:
Net unrealized gains (losses) arising during
the period $ (3,071) $ 1,171 $ (1,900) $ 759 $ (310) $ 449 $ (403) $ 144 $ (259)
Reclassification adjustment for realized (gains) losses
included in net income (965) 384 (581) (164) 67 (97) 797 (285) 512
Net change (4,036) 1,555 (2,481) 595 (243) 352 394 (141) 253
Translation adjustments:
Translation (1,781) 682 (1,099) 754 (281) 473 590 (236) 354
Hedges 820 (327) 493 (780) 310 (470) (563) 222 (341)
Net change (961) 355 (606) (26) 29 3 27 (14) 13
Cash flow hedges:
Net unrealized gains (losses) arising during
the period 584 (226) 358 (737) 294 (443) (250) 98 (152)
Reclassification adjustment for realized (gains) losses
included in net income 402 (160) 242 217 (87) 130 93 (36) 57
Net change 986 (386) 600 (520) 207 (313) (157) 62 (95)
Net loss and prior service cost (credit) of defined
benefit pension and OPEB plans:(a)
Net gains (losses) and prior service credits arising
during the period (3,579) 1,289 (2,290) 934 (372) 562 NA NA NA
Reclassification adjustment for net loss and prior service
credit included in net income 14 (7) 7 59 (22) 37 NA NA NA
Net change (3,565) 1,282 (2,283) 993 (394) 599 NA NA NA
Total other comprehensive income (loss) $ (7,576) $ 2,806 $ (4,770) $ 1,042 $ (401) $ 641 $ 264 $ (93) $ 171
Net loss and prior service cost (credit) of defined
benefit pension and OPEB plans:
Adjustments to initially apply SFAS 158(a) NA NA NA NA NA NA $ (1,746) $ 644 $ (1,102)
(a) For further discussion of SFAS 158 and details of changes to accumulated other comprehensive income (loss), see Note 9 on pages 161–167 of this Annual Report.