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BMO Financial Group 186th Annual Report 200386
Notes to Consolidated Financial Statements
Term to Maturity
Our derivative contracts have varying maturity dates. The remaining contractual term to maturity for the notional amounts of our derivative
contracts is set out below:
(Canadian $ in millions) Term to maturity 2003 2002
Total Total
Within 1 to 3 3 to 5 5 to 10 Over 10 notional notional
1 year years years years years amount amount
Interest Rate Contracts
Swaps $ 272,604 $ 223,173 $ 107,782 $ 103,424 $ 21,122 $ 728,105 $ 747,999
Forward rate agreements, futures and options 645,029 105,141 19,018 36,925 1,375 807,488 716,611
Total interest rate contracts 917,633 328,314 126,800 140,349 22,497 1,535,593 1,464,610
Foreign Exchange Contracts
Cross-currency swaps 9,774 1,783 1,841 3,303 1,234 17,935 18,348
Cross-currency interest rate swaps 12,061 11,206 7,986 11,619 1,719 44,591 44,667
Forward foreign exchange contracts, futures and options 174,675 5,759 938 24 20 181,416 337,063
Total foreign exchange contracts 196,510 18,748 10,765 14,946 2,973 243,942 400,078
Commodity Contracts
Swaps 10,911 4,505 824 98
–
16,338 16,956
Futures and options 14,976 3,181 43
––
18,200 21,888
Total commodity contracts 25,887 7,686 867 98
–
34,538 38,844
Total Equity Contracts 19,233 3,018 2,393 716 526 25,886 13,809
Total Credit Contracts 2,051 3,833 5,175 573 177 11,809 2,090
Total $ 1,161,314 $ 361,599 $ 146,000 $ 156,682 $ 26,173 $ 1,851,768 $ 1,919,431
We record all premises and equipment at cost. Buildings, computer
and other equipment and leasehold improvements are amortized on
a straight-line basis over their estimated useful lives. The maximum
estimated useful lives we use to amortize our assets are:
Buildings 40 years
Computer equipment 5 years
Other equipment 10 years
Leasehold improvements Lease term plus first renewal period
to a maximum of 10 years
Gains and losses on disposal are included in other revenues in our
Consolidated Statement of Income.
(Canadian $ in millions) 2003 2002
Accumulated Carrying Carrying
Cost amortization value value
Land $ 251 $
–
$ 251 $ 269
Buildings 1,254 612 642 701
Computer and other equipment 2,737 1,814 923 950
Leasehold improvements 546 317 229 239
Total $ 4,788 $ 2,743 $ 2,045 $ 2,159
Amortization expense for the years ended October 31, 2003, 2002
and 2001 amounted to $375 million, $396 million and $406 million,
respectively.
On September 12, 2002, we sold our 25% undivided interest in the
land located at King and Bay Streets in Toronto for cash proceeds
of $122 million. The gain on sale of $112 million ($87 million after
tax) was deferred and will be recorded as a reduction in rental
expense over the term of our leases in the building, which expire
between 2013 and 2023.
We write down premises and equipment to fair value when the
related undiscounted cash flows are not expected to allow for
recovery of the carrying value. Fair value of long-lived assets is
determined by discounting the expected related cash flows. There
were no write-downs of long-lived assets due to impairment during
the years ended October 31, 2003 and 2002.
Lease Commitments
We have entered into a number of non-cancellable leases for
premises and equipment. Our total contractual rental commitments
outstanding as at October 31, 2003 are $1,143 million. The com-
mitments for each of the next five years are $204 million for 2004,
$175 million for 2005, $135 million for 2006, $112 million for 2007,
$86 million for 2008 and $431 million thereafter. Included in these
amounts are the commitments related to 681 leased Bank branch
locationsasatOctober31,2003.Netrentexpenseforpremises and
equipment reported in our Consolidated Statement of Income was
$222 million, $223 million and $175 million for the years ended
October 31, 2003, 2002 and 2001, respectively.
Note 10 Premises and Equipment
Transactions are conducted with various counterparties. Set out below is the replacement cost of contracts from customers in the
follow
ing industries:
Interest rate Foreign exchange Commodity Equity Credit
(Canadian $ in millions) contracts contracts contracts contracts contracts
2003 2002 2003 2002 2003 2002 2003 2002 2003 2002
Financial institutions $ 12,315 $ 15,324 $ 3,463 $ 2,496 $ 463 $ 842 $ 118 $ 115 $ 30 $ 6
Other 1,794 2,552 2,393 876 948 756 130 162 2
–
Total $ 14,109 $ 17,876 $ 5,856 $ 3,372 $ 1,411 $ 1,598 $ 248 $ 277 $ 32 $ 6