Bank of Montreal 2008 Annual Report Download - page 131

Notes
BMO Financial Group 191st Annual Report 2008 | 127
Transactions are conducted with various counterparties. Set out below is the replacement cost of contracts (before the impact of master netting
agreements) with customers in the following industries:
Interest rate Foreign exchange Commodity Equity Credit default
(Canadian $ in millions) contracts contracts contracts contracts swaps Total
2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
Financial institutions $ 25,808 $ 7,423 $ 12,118 $ 7,318 $ 1,634 $ 2,602 $897$ 635 $ 3,198 $ 540 $ 43,655 $ 18,518
Governments 1,198 360 1,824 3,411 25 42 ––––3,047 3,813
Natural resources 20 7170 175 1,050 1,368 ––––1,240 1,550
Energy 64 13 80 –958 972 ––––1,102 985
Other 2,029 603 3,668 3,382 339 292 1,099 389 3,237 102 10,372 4,768
Total $ 29,119 $ 8,406 $ 17,860 $ 14,286 $ 4,006 $ 5,276 $ 1,996 $ 1,024 $ 6,435 $ 642 $ 59,416 $ 29,634
Certain comparative figures have been reclassified to conform with the current year’s presentation.
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 2008 2007
Within 1 to 3 3 to 5 5 to 10 Over 10 Total notional Total notional
1 year years years years years amounts amounts
Interest Rate Contracts
Swaps $ 371,847 $ 461,187 $ 336,653 $ 251,584 $ 63,327 $ 1,484,598 $ 1,102,520
Forward rate agreements, futures and options 459,111 101,139 29,167 17,414 2,089 608,920 562,539
Total interest rate contracts 830,958 562,326 365,820 268,998 65,416 2,093,518 1,665,059
Foreign Exchange Contracts
Cross-currency swaps 416 3,899 1,771 5,092 2,503 13,681 10,870
Cross-currency interest rate swaps 27,468 44,936 24,812 31,211 7,792 136,219 92,960
Forward foreign exchange contracts, futures and options 227,823 11,083 3,020 866 41 242,833 173,842
Total foreign exchange contracts 255,707 59,918 29,603 37,169 10,336 392,733 277,672
Commodity Contracts
Swaps 26,900 16,187 1,793 793 315 45,988 49,759
Futures and options 191,603 131,122 4,363 68 – 327,156 571,738
Total commodity contracts 218,503 147,309 6,156 861 315 373,144 621,497
Equity Contracts 31,479 5,467 1,630 1,496 866 40,938 39,873
Credit Default Swaps 17,476 30,431 73,824 27,429 1,047 150,207 90,656
Total notional amount $ 1,354,123 $ 805,451 $ 477,033 $ 335,953 $ 77,980 $ 3,050,540 $ 2,694,757
Certain comparative figures have been reclassified to conform with the current year’s presentation.
Note 11: Premises and Equipment
We record all premises and equipment at cost less accumulated
amortization except land, which is recorded at cost. Buildings, computer
equipment and software, 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 and software 15 years
Other equipment 10 years
Leasehold improvements Lease term to a maximum of 10 years
(Canadian $ in millions) 2008 2007
Accumulated Carrying Carrying
Cost amortization value value
Land $ 191 $ – $ 191 $ 148
Buildings 1,294 673 621 581
Computer equipment
and software 3,100 2,242 858 787
Other equipment 731 533 198 171
Leasehold improvements 804 445 359 293
Total $ 6,120 $ 3,893 $ 2,227 $ 1,980
Amortization expense for the years ended October 31, 2008, 2007
and 2006 amounted to $393 million, $390 million and $360 million,
respectively.
Gains and losses on disposal are included in other non-interest
revenue in our Consolidated Statement of Income.
On July 31, 2008, we sold a property with two office buildings
housing a total of 75,000 square feet at 1210–1248 10th Avenue
in Calgary. The gain on sale was $13 million before tax, which was
recorded in our Consolidated Statement of Income.
On October 15, 2007, we sold the office tower located at 10199 –
101 Street N.W. in Edmonton. The gain on sale was $19 million before tax,
of which $6 million was recorded in our Consolidated Statement of
Income. The remaining $13 million was deferred and is being recorded
as a reduction in rental expense over the term of our lease in the
building, which expires in 2017. The deferred gain as at October 31, 2008
and 2007 was $12 million and $13 million, respectively.
We test premises and equipment for impairment when events
or changes in circumstances indicate that their carrying value may not
be recoverable. We write them down to fair value when the related
undiscounted cash flows are less than the carrying value. There were
no write-downs of premises and equipment due to impairment during
the year ended October 31, 2008 ($nil in 2007 and 2006).