MDS Inc. The following is an excerpt from Note 10 to the financial statements of MDS Inc. Share Capital Effective September 26, 2000, the Company declared a one-for-one stock dividend which has essentially the same impact as a two-for-one stock split. Information contained in this note pertaining to dividends, share repurchases, the stock option plan, the stock dividend and share purchase plan and the employee share ownership plan, has been adjusted to reflect the impact of the stock dividend. The tables contained in note 10a) present the number of shares issued, repurchased and converted based on the date of the actual transaction.

Instructions
Discuss the financial reporting issues for the stock dividend.

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Comm on Number 12,945 47,254 9,676 69,711 (numher of shares in thousands) nversion of Class A Issued on conversion of Class B to Common Common 22.2 $317.9 442.6 Issued subsequent to conversions Stock dividend urchases Balance October 31. 2000 The Statement of Retained Earningsis noted below Years Ended Octoher 31 139,470 $782.3 (millions af Canadian dollars) (restated note 2) 2000 1999 1998 237.6 44.3 (12.2) 7.0) Reained earnings, beginning of year $324.1 $262.7 Net income 81.9 (12.4) 110.3 (18.7) (10.3) $405.4 Repurchasc of shares and options (noce 10) Dividends Retained carnings, end of ycar $324.1 S262.7