Johnson and Johnson 2015 Annual Report Download - page 62

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The Company classifies liabilities for unrecognized tax benefits and related interest and penalties as long-term liabilities.
Interest expense and penalties related to unrecognized tax benefits are classified as income tax expense. The Company
recognized after tax interest expense of $44 million, $12 million and $40 million in 2015, 2014 and 2013, respectively.
The total amount of accrued interest was $366 million and $298 million in 2015 and 2014, respectively.
9. Employee Related Obligations
At the end of 2015 and 2014, employee related obligations recorded on the Consolidated Balance Sheets were:
(Dollars in Millions) 2015 2014
Pension benefits $3,857 4,547
Postretirement benefits 2,738 3,161
Postemployment benefits 2,092 2,062
Deferred compensation 584 599
Total employee obligations 9,271 10,369
Less current benefits payable 417 397
Employee related obligations – non-current $8,854 9,972
Prepaid employee related obligations of $256 million and $233 million for 2015 and 2014, respectively, are included in
Other assets on the Consolidated Balance Sheets.
10. Pensions and Other Benefit Plans
The Company sponsors various retirement and pension plans, including defined benefit, defined contribution and
termination indemnity plans, which cover most employees worldwide. The Company also provides post-retirement
benefits, primarily health care, to all eligible U.S. retired employees and their dependents.
Many international employees are covered by government-sponsored programs and the cost to the Company is not
significant.
Retirement plan benefits for employees hired before January 1, 2015 are primarily based on the employee’s compensation
during the last three to five years before retirement and the number of years of service. In 2014, the Company announced
that the U.S. Defined Benefit plan was amended to adopt a new benefit formula, effective for employees hired on or after
January 1, 2015. The benefits are calculated using a new formula based on employee compensation over total years of
service.
International subsidiaries have plans under which funds are deposited with trustees, annuities are purchased under group
contracts, or reserves are provided.
The Company does not fund retiree health care benefits in advance and has the right to modify these plans in the future.
As described in Note 1 to the Consolidated Financial Statements, the Company has elected to early adopt a practical
expedient beginning for the fiscal year end 2015 to measure its defined benefit plans using the calendar month end
closest to its fiscal year end. In 2015 and 2014 the Company used December 31, 2015 and December 28, 2014,
respectively, as the measurement date for all U.S. and international retirement and other benefit plans.
Net periodic benefit costs for the Company’s defined benefit retirement plans and other benefit plans for 2015, 2014 and
2013 include the following components:
Retirement Plans Other Benefit Plans
(Dollars in Millions) 2015 2014 2013 2015 2014 2013
Service cost $1,037 882 906 257 211 196
Interest cost 988 1,018 908 186 197 151
Expected return on plan assets (1,809) (1,607) (1,447) (7) (7) (6)
Amortization of prior service cost (credit) 2 6 6 (33) (34) (2)
Amortization of net transition obligation – 1 1 – – –
Recognized actuarial losses 745 460 681 201 136 111
Curtailments and settlements 8 (17) – – – 2
Net periodic benefit cost $971 743 1,055 604 503 452
50 •Johnson & Johnson 2015 Annual Report