Bank of Montreal 2004 Annual Report Download - page 110

BMO Financial Group Annual Report 2004106
Notes to Consolidated Financial Statements
Notes
(Canadian $ in millions) 2004 2003
Other
Accounts payable, accrued expenses and other items $ 9,641 $ 8,184
Accrued interest payable 991 984
Non-controlling interest in subsidiaries 2,094 1,518
Liabilities of subsidiaries, other than deposits 502 11
Pension liability (Note 20) 18 59
Other employee future benefits liability (Note 20) 540 503
Total $ 13,786 $ 11,259
Included in non-controlling interest in subsidiaries as at
October 31, 2004 are capital trust securities totalling $1,745 million
that form part of our Tier 1 regulatory capital ($1,150 million
in 2003).
Customer Loyalty Program
We record the liability associated with our customer loyalty program
rewards in the period in which our customers become entitled
to the rewards. We estimate the liability based on estimated costs
of future redemptions and the number of rewards outstanding
that are ultimately expected to be redeemed by cardholders.
Our estimate of the number of points to be redeemed is based on
many factors, including a review of past behaviour of cardholders
and future expected growth. The costs of our loyalty program are
recorded as a reduction in card fees in the Consolidated Statement
of Income. The liability is included in other liabilities in the
Consolidated Balance Sheet.
Future Change in Accounting Policy
See Note 18 for discussion of a future change in accounting
policy affecting non-controlling interest in subsidiaries, effective
November 1, 2004.
Subordinated debt represents our direct unsecured obligations,
in the form of notes and debentures, to our debt holders and forms
part of our regulatory capital. The rights of the holders of our
notes and debentures are subordinate to the claims of depositors
and certain other creditors. We require approval from the
Superintendent of Financial Institutions Canada before we
can redeem any part of our subordinated debt.
During the year ended October 31, 2004, we redeemed our
Series A Medium-Term, 3rd Tranche Notes of $400 million. During
the year ended October 31, 2003, we redeemed our Floating Rate,
Series B1 Subordinated Notes of US$350 million. Our Series 17
Debentures of $250 million matured during fiscal 2003. There were
no gains or losses on any of our redemptions.
Note 16 Subordinated Debt
The term to maturity and repayments of our subordinated debt required over the next five years and thereafter are as follows:
Redeemable
(Canadian $ in millions, Interest at our option Over 2004 2003
except as noted) Face value Maturity date rate (%) beginning in 1 year 2 years 3 years 4 years 5 years 5 years Total Total
Debentures Series 12 $140 December 2008 10.85 December 1998 $ – $ – $ – $ – $ 140 $ – $ 140 $ 140
Debentures Series 16 $100 February 2017 10.00 February 2012
– – – – – 100 100 100
Debentures Series 18 $250 September 2010 8.80 September 2005
– – – – – 250 250 250
Debentures Series 19 $125 March 2011 7.40 March 2006
– – – – – 125 125 125
Debentures Series 20 $150 December 2025 to 2040 8.25 not redeemable
– – – – – 150 150 150
Debentures Series 21 $300 May 2011 8.15 May 2006
– – – – – 300 300 300
Debentures Series 22 $150 July 2012 7.92 July 2007
– – – – – 150 150 150
6.10% Notes US$300 September 2005 6.10 September 1998 (1) 365
– – – – – 365 396
7.80% Notes US$300 April 2007 7.80 April 2000 (1)
– – 365 – – – 365 395
Series A Medium-Term Notes
2nd Tranche $150 February 2013 5.75 February 2008
– – – – – 150 150 150
3rd Tranche $400 December 2008 5.65 redeemed
– – – – – – – 400
Series B Medium-Term Notes $300 June 2010 6.60 June 2005 – – – – – 300 300 300
Total $ 365 $ – $ 365 $ – $ 140 $ 1,525 $ 2,395 $ 2,856
(1) Redeemable at our option only if certain tax events occur.