CONSOLIDATED STATEMENT O F CASH FLOW For the Year Ended October 31 (Canadian $ in millions) 2002 2001 2000 Cash Flows from Operating Activities Net income $ 1,417 $ 1,471 $ 1,857 Adjustments to determine net cash flows provided by (used in) operating activities Provision for credit losses 820 980 358 Amortization of premises and equipment 396 406 402 Amortization of intangible assets 100 56 33 Amortization of goodwill (Note 9) — 62 54 Gain on sale of securitized loans (168) (82) (23) Write-down of investment securities 322 284 16 Restructuring charge — — (43) Future income tax expense (benefit) 283 (180) 131 Net (gain) on sale of investment securities (176) (407) (199) Change in accrued interest (Increase) decrease in interest receivable 256 512 (202) Increase (decrease) in interest payable (189) (250) 182 Net (increase) decrease in unrealized gains and amounts receivable on derivativ e contracts 1,207 (9,318) (4,402) Net increase (decrease) in unrealized losses and amounts payable on derivative co ntracts (1,551) 10,304 4,313 Net (increase) decrease in trading securities (6,227) 5,794 (4,748) Net (decrease) in current income taxes payable (175) (80) (423) Changes in other items and accruals, net (412) 1,105 (294) Net Cash Provided by (Used in) Operating Activities (4,097) 10,657 (2,988) Cash Flows from Financing Activities Net increase (decrease) in deposits 7,548 (3,793) (905) Net increase (decrease) in securities sold but not yet purchased 1,045 (2,744) (1,097) Net increase (decrease) in securities sold under repurchase agreements 7,316 (2,499) (4,428) Net (decrease) in liabilities of subsidiaries (1,313) (15) (1,219) Proceeds from issuance of securities of a subsidiary — 800 350 Proceeds from issuance of subordinated debt — — 300 Repayment of subordinated debt (850) (300) (150) Redemption of preferred shares — (633) — Proceeds from issuance of preferred shares 478 — — Proceeds from issuance of common shares 81 149 72 Share issue expense, net of applicable income tax (7) — — Common shares repurchased for cancellation — (2,031) (500) Dividends paid (668) (648) (631) Net Cash Provided by (Used in) Financing Activities 13,630 (11,714) (8,208) Cash Flows from Investing Activities Net (increase) decrease in interest bearing deposits with banks (1,407) 2,308 5,253 Purchase of investment securities (37,437) (35,979) (31,524) Maturities of investment securities 27,444 25,955 24,299 Proceeds from sales of investment securities 9,928 13,838 8,966 Net (increase) in loans and loan substitute securities (6,338) (6,694) (6,322) Proceeds from securitization of assets 519 2,234 1,837 Net (increase) decrease in securities purchased under resale agreements (710) 1,354 8,782 Proceeds from sale of land (Note 8) 122 — — Premises and equipment — net purchases (384) (399) (345) Acquisitions (Note 10) (1,028) (245) (25) Net Cash Provided by (Used in) Investing Activities (9,291) 2,372 10,921 Net Increase (Decrease) in Cash and Cash Equivalents 242 1,315 (275) Cash and Cash Equivalents at Beginning of Year 3,459 2,144 2,419 Cash and Cash Equivalents at End of Year $ 3,701 $ 3,459 $ 2,144 Represented by: Cash and non-interest bearing deposits with Bank of Canada and other banks $ 1,257 $ 2,066 $ 1,219 Cheques and other items in transit, net 2,444 1,393 925 $ 3,701 $ 3,459 $ 2,144 Supplemental Disclosure of Cash Flow Information Amount of interest paid in the year $ 4,495 $ 8,751 $ 9,917 Amount of income taxes paid in the year 393 405 1,123 The accompanying notes to consolidated financial statements are an integral part of this statement. Certain comparative figures have been reclassified to conform with the current yearGLYPH<213>s presentation. BMO FINANCIAL GROUP ANNUAL REPORT 2002 71