Johnson & Johnson - Index

Johnson & Johnson - report - Index

Net periodic benefit costs for the Company’s defined benefit retirement plans and other benefit plans for 2007, 2006 and 2005
include the following components:
Retirement Plans Other Benefit Plans
____________________________________ ____________________________________
(Dollars in Millions) 2007 2006 2005 2007 2006 2005
Service cost $ 597 552 462 $140 122 56
Interest cost 656 570 488 149 136 87
Expected return on plan assets (809) (701) (579) (2) (3) (3)
Amortization of prior service cost 10 10 12 (7) (7) (7)
Amortization of net transition asset 1 (1) (2) — — —
Recognized actuarial losses 186 251 219 66 74 25
Curtailments and settlements 5 4 2 — — —
Net periodic benefit cost $ 646 685 602 $346 322 158
The net periodic benefit cost attributable to U.S. retirement plans was $379 million in 2007, $423 million in 2006 and $370 million in 2005.
Amounts expected to be recognized in net periodic benefit cost
in the coming year for the Company’s defined benefit retirement
plans and other postretirement plans:
The Company’s discount rates are determined by considering current
yield curves representing high quality, long-term fixed income instruments.
The resulting discount rates are consistent with the duration
of plan liabilities.
The expected long-term rate of return on plan assets
assumption is determined using a building block approach, considering
historical averages and real returns of each asset class.
In certain countries, where historical returns are not meaningful,
consideration is given to local market expectations of
long-term returns.
(Dollars in Millions)
Amortization of net transition obligation $ 2
Amortization of net actuarial losses 132
Amortization of prior service cost 5
The weighted-average assumptions in the following table represent the rates used to develop the actuarial present value of projected
benefit obligation for the year listed and also the net periodic benefit cost for the following year.
Retirement Plans Other Benefit Plans
____________________________________ ____________________________________
(Dollars in Millions) 2007 2006 2005 2007 2006 2005
U.S. Benefit Plans
Discount rate 6.50% 6.00 5.75 6.50% 6.00 5.75
Expected long-term rate of return
on plan assets 9.00 9.00 9.00 9.00 9.00 9.00
Rate of increase in compensation levels 4.50 4.50 4.50 4.50 4.50 4.50
International Benefit Plans
Discount rate 5.50% 5.00 4.75 6.50% 6.00 5.00
Expected long-term rate of return
on plan assets 8.25 8.00 8.25 — — —
Rate of increase in compensation levels 4.00 3.75 3.75 4.50 4.50 4.25
The following table displays the assumed health care cost
trend rates, for all individuals:
Health Care Plans 2007 2006
Health care cost trend rate assumed for next year 9.00% 9.00
Rate to which the cost trend rate is assumed
to decline (ultimate trend) 5.00% 4.50
Year the rate reaches the ultimate trend rate 2014 2012
A one-percentage-point change in assumed health care cost
trend rates would have the following effect:
One-Percentage- One-Percentage-
(Dollars in Millions) Point Increase Point Decrease
Health Care Plans
Total interest and service cost $ 35 $ (27)
Postretirement benefit obligation 320 (259)
NOTES TO CONSOLIDA TED FINANCIAL ST A TEMENTS 61