This section provides an analysis of our financial performance for 20 02 and 2001 that focuses on the statement of income and the balance sheet included in our consolidated financial statements, whi ch begin on page 67. Highlights b Excluding non-recurring items, revenue increased $151 million or 2% in 2002, compared with growth of 3% in 2001.  b Solid growth in Personal and Commercial Client Group was offset by lower Investment Banking Group revenue in the difficult market environment. b Excluding non-recurring items, the non-interest expense-to-revenue ratio was 67.4% in 2002, compared with 65.1% in 2001.  b Excluding non-recurring items, the effect of acquired businesses and  severance costs incurred in the fourth quarter, expenses were unchanged from a year ago. Non-GAAP Measures Operating results periodically include non-recurring items. When management designates items as non-recurring for re- porting purposes, they are generally infrequent, material and quantifiable, and are not expected to recur in the near future. Management considers the exclusion of such items appropriate in assessing the ongoing operations of BMO and when analyz- ing trends.  The accompanying table outlines BMO’s non-recurring items and their effect on BMO’s GAAP-based summary income state- ment. It also outlines the adjustments used in deriving cash net income, which some analysts consider an important earnings measure. For 2002, acquisition-related costs have been catego- rized as non-recurring because they were material to Private Client Group’s results and may distort trend analysis. In 2001 and 2000, gains on sales, the increase in the general provision for credit losses and the reduction in the value of future tax assets were classified as non-recurring because they were considered irregular and material occurrences, and in some cases were dependentonactionstakenbymanagementthathad the potential to significantly affect results. The write-down of the investment in collateralized bond obligations (CBOs) was designated as non-recurring because of its unusual nature and its significance in the affected quarter. The reversals of the loss provision on sale of securities of lesser-developed countries (LDCs) and of restructuring costs were treated as non-recurring because they relate to charges that had previously been desig- nated as non-recurring. Management’s designation of an item as non-recurring occurs in the quarter in which the item affects results and is based on available facts and expectations at that time. To date, BMO has  not retroactively adjusted the non-recurring designation of any items on the basis of events in subsequent periods. Although such adjustments are possible and could be appropriate, maintaining an item’s designation as non-recurring promotes neutrality. Designations which favourably or unfavourably affect analysis in the period of designation will have the opposite effect when results of subsequent periods are compared to those of the period in which the non-recurring item arose. Management and certain of BMO’s stakeholders believe per- formance analysis is enhanced by focusing on cash results and results excluding non-recurring items. However, securities reg- ulators require corporations to caution readers that earnings as adjustedforsuchitemsdonothavestandardizedmeaningsunder GAAP and are unlikely to be comparable to similar measures used by other companies.  Effects of Non-Recurring Items  ($ millions) 2002 2001 2000 R eported R evenues (teb) 8,859 8,863 8,664 Provision for credit losses 820 980 358 Non-interest expenses 6,030 5,671 5,258 I ncome before the following 2,009 2,212 3,048 Provision for income taxes (teb) 530 643 1,123 Other 62 98 68 Ne t income  1,417 1,471 1,857 Amortization of goodwill and  intangible assets, net of income taxes 75 101 74 C ash net income 1,492 1,572 1,931 Excluding non-recurring items R evenues (teb) 8,859 8,708 8,438 Provision for credit losses 820 880 400 Non-interest expenses 5,968 5,671 5,301 I ncome before the following 2,071 2,157 2,737 Provision for income taxes (teb) 553 681 997 Other 62 98 68 Ne t income  1,456 1,378 1,672 Amortization of goodwill and  intangible assets, net of income taxes 75 101 74 C ash net income 1,531 1,479 1,746 Non-recurring items Gain on sale of Partners First  — — 112  Gain on sale of U.S. Corporate Trust — — 74  Gain on sales of branches — 12 40 Gain on sale of Bancomer — 321  — Write-down of equity investments in CBOs — (178) — R evenues — 155 226 Reversal of loss provision on sale of  LDC securities — — (42) I ncrease of general allowance — 100  — Provision for credit losses — 100 (42) Reversal of restructuring charge — — (43) Acquisition-related costs 62 — — Non-interest expenses 62 — (43) Pre-tax impact of non-recurring items (62) 55 311  I ncome taxes thereon (23) (63) 126  Adjustment of future tax assets — 25 — Effect on net income (39) 93 185 18 BMO FINANCIAL GROUP ANNUAL REPORT 2002 FINANCIAL STATEMENT ANALY SIS