JP Morgan Chase 2010 Annual Report Download - page 270

Notes to consolidated financial statements
JPMorgan Chase & Co./2010 Annual Report
270
Note 26 – Accumulated other comprehensive income/(loss)
Accumulated other comprehensive income/(loss) includes the after-tax change in unrealized gains/(losses) on AFS securities, foreign currency
translation adjustments (including the impact of related derivatives), cash flow hedging activities and net loss and prior service costs/(credit)
related to the Firm’s defined benefit pension and OPEB plans.
As of or for the year ended
December 31, (in millions)
Unrealized gains/(losses)
on AFS securities(b)
Translation
adjustments,
net of hedges Cash flow hedges
Net loss and
prior
service costs/(credit) of
defined benefit pension
and OPEB plans
Accumulated other
comprehensive
income/(loss)
Balance at December 31, 2007 $ 380 $ 8 $ (802) $ (503) $ (917
)
Net change (2,481)
(
c
)
(606) 600 (2,283) (4,770
)
Balance at December 31, 2008
(2,101)
(598)
(202)
(2,786)
(5,687
)
Net change 4,133
(
d
)
582 383 498 5,596
Balance at December 31, 2009 2,032
(e)
(16) 181 (2,288) (91 )
Cumulative
e
ffect of changes in
accounting principles(a) (144) — — — (144 )
Net change 610
(
f
)
269 25 332 1,236
Balance at December 31, 2010 $ 2,498
(
e
)
$ 253 $ 206 $ (1,956) $ 1,001
(a) Reflects the effect of adoption of accounting guidance related to the consolidation of VIEs, and to embedded credit derivatives in beneficial interests in securitized
financial assets. AOCI decreased by $129 million due to the adoption of the accounting guidance related to VIEs as a result of the reversal of the fair value adjustments
taken on retained AFS securities that were eliminated in consolidation; for further discussion see Note 16 on pages 244–259 of this Annual Report. AOCI decreased by
$15 million due to the adoption of the new guidance related to credit derivatives embedded in certain of the Firm’s AFS securities; for further discussion, see Note 6 on
pages 191–199 of this Annual Report.
(b) 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.
(c) The net change during 2008 was due primarily to spread widening related to credit card asset-backed securities, nonagency MBS and collateralized loan obligations.
(d) The net change during 2009 was due primarily to overall market spread and market liquidity improvement as well as changes in the composition of investments.
(e) Includes after-tax unrealized losses of $(81) million and $(226) million not related to credit on debt securities for which credit losses have been recognized in income at
December 31, 2010 and 2009, respectively.
(f) The net change during 2010 was due primarily to the narrowing of spreads on commercial and nonagency MBS as well as on collateralized loan obligations; also
reflects increased market value on pass-through MBS due to narrowing of spreads and other market factors.
The following table presents the before- and after-tax changes in net unrealized gains/(losses); 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/(credits) from pension and OPEB plans; and amortization of pension and OPEB
amounts into net income. Reclassification adjustments include amounts recognized in net income that had been recorded previously in other
comprehensive income/(loss).
2010
2009 2008
Before
Tax
After
Befo
re
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
$
3,9
82
$
(1,5
40
)
$
2,4
4
2
$ 7,870 $ (3,029) $ 4,841 $ (3,071) $ 1,171 $ (1,900)
Reclassification adjustment for realized (gains)/losses
included in net income (2,982) 1,150 (1,832) (1,152) 444 (708) (965) 384 (581)
Net change
1,000
(390)
610
6,718 (2,585) 4,133 (4,036) 1,555 (2,481)
Translation adjustments:
Translation
402
(139)
263
1,139 (398) 741 (1,781) 682 (1,099)
Hedges
11
(5)
6
(259) 100 (159) 820 (327) 493
Net change
413
(144)
269
880 (298) 582 (961) 355 (606)
Cash f
low hedges:
Net unrealized gains/(losses) arising during the period
24
7
(9
6
)
15
1
767 (308) 459 584 (226) 358
Reclassification adjustment for realized (gains)/losses
included in net income
(206
)
80
(12
6
)
(124) 48 (76) 402 (160) 242
Net change
4
1
(1
6
)
25
643 (260) 383 986 (386) 600
Net loss and prior service cost/(credit) of
defined benefit pension and OPEB plans:
Net gains/(losses) and prior service credits arising
during the period 294 (96) 198 494 (200) 294 (3,579) 1,289 (2,290)
Reclassification adjustment for net loss and prior
service credits included in net income 224 (90) 134 337 (133) 204 14 (7) 7
Net change
51
8
(
18
6
)
332
831 (333) 498 (3,565) 1,282 (2,283)
Total
o
ther comprehensive income/(loss)
$
1,97
2
$
(73
6
)
$
1,236
$ 9,072 $ (3,476) $ 5,596 $ (7,576) $ 2,806 $ (4,770)