KEYCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW Year ended December 31, in millions 2003 2002 2001 OPERATING ACTIVITIES Net income $ 903 $ 976 $ 132 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 501 553 1,350 Cumulative effect of accounting changes, net of tax GLYPH<209> GLYPH<209> 25 Depreciation expense and software amortization 197 215 285 Amortization of intangibles 13 11 245 Net securities gains (11) (6) (35) Net (gains) losses from principal investing (40) 14 79 Net gains from loan securitizations and sales (90) (56) (49) Deferred income taxes 72 155 (139) Net (increase) decrease in mortgage loans held for sale 78 118 (10) Net (increase) decrease in trading account assets (232) (204) 146 Net decrease in accrued restructuring charges (11) (35) (64) Other operating activities, net (124) (282) (271) NET CASH PROVIDED BY OPERATING ACTIVITIES 1,256 1,459 1,694 INVESTING ACTIVITIES Cash used in acquisitions, net of cash acquired (17) (63) (3) Net (increase) decrease in other short-term investments 260 485 (160) Purchases of securities available for sale (6,186) (6,744) (4,290) Proceeds from sales of securities available for sale 3,333 1,552 349 Proceeds from prepayments and maturities of securities available for sale 3,435 2,317 5,859 Purchases of investment securities (19) (18) (46) Proceeds from prepayments and maturities of investment securities 53 95 144 Purchases of other investments (366) (167) (225) Proceeds from sales of other investments 80 45 56 Proceeds from prepayments and maturities of other investments 217 57 106 Net increase in loans, excluding acquisitions, sales and divestitures (5,100) (3,184) (1,876) Purchases of loans (453) GLYPH<209> (107) Proceeds from loan securitizations and sales 4,748 3,393 4,916 Purchases of premises and equipment (95) (90) (121) Proceeds from sales of premises and equipment 12 9 15 Proceeds from sales of other real estate owned 74 40 27 NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (24) (2,273) 4,644 FINANCING ACTIVITIES Net increase (decrease) in deposits 1,532 4,128 (3,854) Net decrease in short-term borrowings (1,071) (2,611) (2,609) Net proceeds from issuance of long-term debt, including capital securities 2,932 4,739 3,864 Payments on long-term debt, including capital securities (4,520) (4,418) (3,532) Loan payments received from ESOP trustee GLYPH<209> GLYPH<209> 13 Purchases of treasury shares (303) (77) (50) Net proceeds from issuance of common stock 59 37 33 Cash dividends paid (513) (511) (501) NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (1,884) 1,287 (6,636) NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS (652) 473 (298) CASH AND DUE FROM BANKS AT BEGINNING OF YEAR 3,364 2,891 3,189 CASH AND DUE FROM BANKS AT END OF YEAR $ 2,712 $ 3,364 $ 2,891 Additional disclosures relative to cash GLYPH<223>ow: Interest paid $1,258 $1,549 $2,626 Income taxes paid 285 173 115 Noncash items: Derivative assets resulting from adoption of new accounting standard GLYPH<209> GLYPH<209> $120 Derivative liabilities resulting from adoption of new accounting standard GLYPH<209> GLYPH<209> 152 Cash dividends declared, but not paid GLYPH<209> GLYPH<209> 127 Transfer of investment securities to other investments GLYPH<209> $847 832 Transfer of investment securities to securities available for sale GLYPH<209> 62 62 Net transfer of loans to other real estate owned $98 52 46 Assets acquired GLYPH<209> 475 GLYPH<209> Liabilities assumed GLYPH<209> 450 GLYPH<209> See Notes to Consolidated Financial Statements. NEXT PAGE PREVIOUS PAGE SEARCH BACK TO CONTENTS 49