CONSOLIDATED STATEMENT OF CHANGES  IN SHAREHOLDERS’ EQUITY For the Year Ended October 31 (Canadian $ in millions) 2002 2001 2000 Preferred Shares (Note 15) Balance at beginning of year $ 1,050 $ 1,681 $ 1,668 Issued during the year 478 — — Redeemed during the year — (633) — Translation adjustment on shares issued in a foreign currency (11) 2 13 Balance at End of Year 1,517 1,050 1,681 Number o f Shares 2002 2001 2000 Common Shares  (Note 15) Balance at beginning of year 489,084,527 522,583,894 534,064,200 3,375 3,173 3,190 Issued under the Shareholder Dividend Reinvestment and Share Purchase Plans 1,204,820 903,186 1,373,272 44 35 37 Issued under the Stock Option Plan 1,923,115 6,177,235 1,915,282 37 114 35 Issued on the exchange of shares of  subsidiary corporations 292,416 1,134,765 959,140 3 7 6 Issued on the acquisition of businesses (Note 10) — 10,285,447 — — 400 — Cancellation of stock options granted on acquisition  of an investment (Note 15) — — — — (22) — Repurchased for cancellation (Note 15) — (52,000,000) (15,728,000 ) — (332) (95) Balance at End of Year 492,504,878 489,084,527 522,583,894 3,459 3,375 3,173 Retained Earnings Balance at beginning of year 6,257 7,087 6,123 Cumulative impact of adopting Future Employee Benefits  standard, net of applicable income tax (Note 16) — (250) — 6,257 6,837 6,123 Net income 1,417 1,471 1,857 Dividends  — Preferred shares (79) (80) (101) — Common shares (589) (568) (530) Net unrealized gain (loss) on translation  of net investments in foreign operations (81) 179 143 Recognition of unrealized translation losses on disposition  of an investment in a foreign operation (Note 3) — 99 — Gain on cancellation of stock options granted on acquisition of an investment, net of applicable income tax (Note 15) — 18 — Common shares repurchased for cancellation (Note 15) — (1,699) (405) Share issue expense, net of applicable income tax (7) — — Balance at End of Year 6,918 6,257 7,087 Total ShareholdersGLYPH<213> Equity $ 11,894 $ 10,682 $ 11,941 Supplemental Disclosure of Net Unrealized Gain (Loss)  on Translation of Net Investments in Foreign Operations Unrealized gain (loss) on translation  of net investments in foreign operations $ (200) $ 440 $ 322 Hedging gain (loss) 200 (439) (332) Net income tax benefit (expense) (81) 178 153 Net unrealized gain (loss) on translation  of net investments in foreign operations $ (81) $ 179 $ 143 The accompanying notes to consolidated financial statements are an integral part of this statement. 70 BMO FINANCIAL GROUP ANNUAL REPORT 2002