Bank of Montreal 2004 Annual Report Download - page 119

BMO Financial Group Annual Report 2004 115
Notes
Basic Earnings per Share
Our basic earnings per share is calculated by dividing our net
income, after deducting total preferred share dividends, by the daily
average number of fully paid common shares outstanding through-
out the year.
Basic earnings per share
(Canadian $ in millions, except as noted) 2004 2003 2002
Net income $ 2,351 $ 1,825 $ 1,417
Dividends on preferred shares (76) (82) (79)
Net income available to common shareholders $ 2,275 $ 1,743 $ 1,338
Average number of common
shares outstanding (in thousands) 501,656 496,208 490,816
(Canadian $)
Basic earnings per share $ 4.53 $ 3.51 $ 2.73
Diluted Earnings per Share
Diluted earnings per share represents what our earnings per
share would have been if instruments convertible into common
shares that had the impact of reducing our earnings per share
had been converted either at the beginning of the year for instru-
ments that were outstanding all year or from the date of issue
for instruments issued during the year.
Convertible Shares
In determining diluted earnings per share, we increase net
income available to common shareholders by dividends paid on
convertible shares as these dividends would not have been paid
if the shares had been converted at the beginning of the year.
Similarly, we increase the average number of common shares
outstanding by the number of shares that would have been issued
had the conversion taken place at the beginning of the year.
Note 22 Earnings Per Share
Income which we earn in foreign countries through our branches
or subsidiaries is generally subject to tax in those countries.
We are also subject to Canadian taxation on the income earned
in our foreign branches. Canada allows a credit for foreign
taxes paid on this income. Upon repatriation of earnings from
certain foreign subsidiaries, we would be required to pay tax
on certain of these earnings. As repatriation of such earnings is
not planned in the foreseeable future, we have not recorded the
related future income tax liability. Canadian and foreign taxes
that would be payable, at existing tax rates, if all of our foreign
subsidiaries’ earnings were repatriated as at October 31, 2004,
2003 and 2002 are estimated to be $495 million, $490 million and
$530 million, respectively.
Set out below is a reconciliation of our statutory tax rates and income tax that would be payable at these rates to the effective income tax
rates and provision for income taxes that we have recorded in our Consolidated Statement of Income:
(Canadian $ in millions, except as noted) 2004 2003 2002
Combined Canadian federal and provincial income taxes at the statutory tax rate $ 1,195 35.0% $ 935 36.2% $ 727 38.3%
Increase (decrease) resulting from:
Tax-exempt income (95) (2.8) (112) (4.4) (99) (5.2)
Foreign operations subject to different tax rates (96) (2.9) (153) (5.9) (197) (10.3)
Large corporations tax 5 0.1 7 0.3 15 0.8
Change in tax rate for future income taxes (11) (0.2) 10 0.4 9 0.4
Intangible assets not deductible for tax purposes 14 0.4 14 0.6 16 0.8
Other (4) (0.1) (13) (0.5) (47) (2.5)
Provision for income taxes and effective tax rate $ 1,008 29.5% $ 688 26.7% $ 424 22.3%
Provision for Income Taxes
(Canadian $ in millions) 2004 2003 2002
Consolidated Statement of Income
Provision for income taxes – Current $ 859 $ 725 $ 137
– Future 149 (37) 287
1,008 688 424
Shareholders’ Equity
Income tax expense (benefit) related to:
Foreign currency gains on translation
of net investments in foreign operations 254 601 81
Other 9 – (4)
Total $ 1,271 $ 1,289 $ 501
Components of Total Provision for Income Tax
Canada: Current income taxes
Federal $ 605 $ 752 $ 207
Provincial 273 294 46
878 1,046 253
Canada: Future income taxes
Federal 88 7 132
Provincial 39 244
127 9 176
Total Canadian 1,005 1,055 429
Foreign: Current income taxes 236 280 (35)
Future income taxes 30 (46) 107
Total foreign 266 234 72
Total $ 1,271 $ 1,289 $ 501