Bank of America 2007 Annual Report Download - page 156

are not initially recognized as a component of net periodic benefit cost will
be recognized as a component of accumulated OCI. Those amounts will
subsequently be recognized as a component of net periodic benefit cost
as they are amortized during future periods.
The incremental effects of adopting the provisions of SFAS 158 on
the Corporation’s Consolidated Balance Sheet at December 31, 2006 are
presented in the table below. The adoption of SFAS 158 had no effect on
the Corporation’s Consolidated Statement of Income for 2006, or for any
year presented.
The table on page 155 summarizes the changes in the fair value of
plan assets, changes in the projected benefit obligation (PBO), the funded
status of both the accumulated benefit obligation (ABO) and the PBO, and
the weighted average assumptions used to determine benefit obligations
for the pension plans and postretirement plans at December 31, 2007 and
2006. Amounts recognized at December 31, 2007 and 2006 are reflected
in other assets, and accrued expenses and other liabilities on the Con-
solidated Balance Sheet. The discount rate assumption is based on a cash
flow matching technique and is subject to change each year. This technique
utilizes a yield curve based upon Aa-rated corporate bonds with cash flows
that match estimated benefit payments to produce the discount rate
assumption. For the Qualified Pension Plans, the Nonqualified Pension
Plans and the Postretirement Health and Life Plans, the discount rate at
December 31, 2007, was 6.00 percent. For both the Qualified Pension
Plans and the Postretirement Health and Life Plans, the expected long-term
return on plan assets is 8.00 percent for 2008. The expected return on
plan assets is determined using the calculated market-related value for the
Qualified Pension Plans and the fair value for the Postretirement Health and
Life Plans. The asset valuation method for the Qualified Pension Plans
recognizes 60 percent of the market gains or losses in the first year, with
the remaining 40 percent spread equally over the next four years.
(Dollars in millions)
December 31, 2006
Balance Sheet
Before Application
of SFAS 158
SFAS 158
Adoption
Adjustments
December 31, 2006
Balance Sheet
After Application of
SFAS 158
Other assets
(1)
$ 121,649 $(1,966) $ 119,683
Total assets 1,461,703 (1,966) 1,459,737
Accrued expenses and other liabilities
(2)
42,790 (658) 42,132
Total liabilities 1,325,123 (658) 1,324,465
Accumulated OCI
(3)
(6,403) (1,308) (7,711)
Total shareholders’ equity 136,580 (1,308) 135,272
Total liabilities and shareholders’ equity 1,461,703 (1,966) 1,459,737
(1) Amounts represent adjustments to plans in an asset position of $(2.0) billion.
(2) Adjustments to plans in a liability position of $301 million, the reversal of the additional minimum liability adjustment of $(190) million and an adjustment to deferred tax liabilities of $(769) million.
(3) Includes employee benefit plan adjustments of $(1.4) billion, net-of-tax, and the reversal of the additional minimum liability adjustment of $120 million, net-of-tax.
154 Bank of America 2007