Years ended December 31, 2012 and 2011 CAPITAL POWER CORPORATION Consolidated Statements of Cash Flows (In millions of Canadian dollars) 1 Total interest paid. See accompanying notes to the consolidated financial statements 78 2012 2011 Cash flows from operating activities: Net income $ 90 $ 188 Non-cash adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization (note 4) 221 229 Gains on disposals (note 8) (15) (93) Impairments (note 10) 74 43 Finance expense (note 5) 75 105 Fair value changes on derivative instruments 3 49 Unrealized foreign exchange losses - 6 Income tax recovery (note 6) (4) - Other items 4 (6) Interest paid 1 (59) (88) Income taxes paid (7) (14) Change in non-cash operating working capital (note 26) (140) 42 Net cash flows from operating activities 242 461 Cash flows used in investing activities: Payments to acquire property, plant and equipment and other assets (598) (493) Proceeds on disposal of assets 116 131 Business acquisitions, net of acquired cash - (647) Other cash flows from investing activities 16 24 Net cash flows used in investing activities (466) (985) Cash flows from financing activities: Proceeds from issue of loans and borrowings 250 604 Repayment of loans and borrowings (62) (293) Debt issue costs (3) (5) Proceeds from issue of common shares (note 24) 8 469 Proceeds from issue of preferred shares (note 24) 150 - Share issue costs (note 24) (5) (20) Distributions paid to non-controlling interests (note 27) (42) (110) Common share dividends paid (note 24) (62) (51) Preferred share dividends paid (note 24) (6) (6) Preferred share dividends paid by subsidiary - (11) Interest paid 1 (23) (36) Net cash flows from financing activities 205 541 Foreign exchange losses on cash held in a foreign currency (1) - Net (decrease) increase in cash and cash equivalents (20) 17 Cash and cash equivalents at beginning of year 73 56 Cash and cash equivalents at end of year $ 53 $ 73