Bank of Montreal 2004 Annual Report Download - page 124

BMO Financial Group Annual Report 2004120
Notes to Consolidated Financial Statements
Notes
We prepare our consolidated financial statements in accordance
with GAAP in Canada, including interpretations of GAAP by our
regulator, the Superintendent of Financial Institutions Canada.
The significant differences which would result if United States
GAAP were applied in the preparation of our consolidated financial
statements are as follows:
Note 27 Reconciliation of Canadian and United States Generally Accepted Accounting Principles
Subordinated Debt
The fair value of our subordinated debt is determined by referring to current market prices for similar debt instruments.
Set out below are the amounts which would be reported if all of our financial instrument assets and liabilities were reported at their fair
values, adjusted for the impact of derivatives that hedge changes in fair value (assets and liabilities that are not financial instruments are
excluded from this table):
(Canadian $ in millions) 2004 2003
Fair value Fair value Fair value Fair value
Book Fair of hedging over (under) Book Fair of hedging over (under)
value value derivatives(1) book value value value derivatives(1) book value
Assets
Cash resources $ 18,045 $ 18,045 $ – $ – $ 19,860 $ 19,860 $ – $ –
Securities 50,472 50,558 (48) 38 54,790 55,102 (170) 142
Loans and customers’ liability under acceptances,
net of the allowance for credit losses 156,248 156,407 (37) 122 146,156 146,686 9 539
Derivative financial instruments
– trading 24,914 24,914 – – 20,878 20,878 ––
Other assets 10,974 10,974 – – 10,504 10,504 ––
$ 260,653 $ 260,898 $ (85) $ 160 $ 252,188 $ 253,030 $ (161) $ 681
Liabilities
Deposits $ 175,190 $ 175,710 $ (196) $ 324 $ 171,551 $ 172,431 $ (389) $ 491
Derivative financial instruments – trading 23,741 23,741 – – 20,375 20,375 ––
Acceptances 5,355 5,355 – – 5,611 5,611 ––
Securities sold but not yet purchased 10,441 10,441 – – 8,255 8,255 ––
Securities sold under repurchase agreements 20,865 20,865 – – 23,765 23,765 ––
Other liabilities 13,786 13,786 – – 11,259 11,259 ––
Subordinated debt 2,395 2,630 8 243 2,856 3,165 6 315
$ 251,773 $ 252,528 $ (188) $ 567 $ 243,672 $ 244,861 $ (383) $ 806
Total $ (407) $ (125)
(1) Refer to Note 9.
Condensed Consolidated Statement of Income
For the Year Ended October 31 (Canadian $ in millions, except per share amounts) 2004 2003 2002
Net income, as reported under Canadian GAAP $ 2,351 $ 1,825 $ 1,417
Adjustments to arrive at United States GAAP:
Net Interest Income
Variable interest entities (a) 38
––
Mortgage prepayment fees (b) (42) ––
Non-Interest Revenue
Variable interest entities (a) 104
––
Securitizations (c) (3) (44) (40)
Derivatives (d) (5) (3) (37)
Non-Interest Expense
Variable interest entities (a) (7) ––
Stock options (e) (29) (43) (47)
Software development costs (f) (42) 39 40
Pension and related benefits (g) 5 (2) (4)
Goodwill and other assets (h) 67 10
Income taxes and net change in income taxes (i) (including adjustments due to items listed above) (24) 321
Cumulative impact of an accounting change (a) (111) ––
Net income based on United States GAAP $ 2,241 $ 1,782 $ 1,360
Earnings per share: basic
– Canadian GAAP net income $ 4.53 $ 3.51 $ 2.73
– United States GAAP net income before cumulative effect of accounting change 4.54 3.43 2.61
– Cumulative effect of accounting change (0.23) ––
– United States GAAP net income 4.31 3.43 2.61
Earnings per share: diluted – Canadian GAAP net income $ 4.42 $ 3.44 $ 2.68
– United States GAAP net income before cumulative effect of accounting change 4.42 3.35 2.57
– Cumulative effect of accounting change (0.22) ––
– United States GAAP net income 4.20 3.35 2.57
Certain comparative figures have been reclassified to conform with the current year’s presentation.