MANAGEMENT’S DISCUSSION AND ANALYSIS SELECTED ANNUAL INFORMATION Consolidated Statements of Operations and Comprehensive Income  NEW ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements Recent Accounting Guidance Not Yet Adopted 43 HYDRO ONE ANNUAL REPORT 2013 In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating  Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This ASU provides guidance on the presentation of unrecognized  tax benefits. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, and should be  applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The adoption of this  ASU is not anticipated to have a significant impact on our Consolidated Financial Statements. In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated  Other Comprehensive Income. This ASU requires an entity to provide information about the amounts reclassified out of accumulated other  comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is  presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net  income, but only if the amount reclassified is required under US GAAP to be reclassified to net income in its entirety in the same reporting  period. For other amounts that are not required under US GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under US GAAP that provide additional detail about those amounts. This ASU was required to be applied prospectively and was effective for fiscal years, and interim periods within those years, beginning after December 15, 2012. The adoption of this ASU did not have a significant impact on our Consolidated Financial Statements. In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-11, Balance Sheet  (Topic 210): Disclosures about Offsetting Assets and Liabilities. This ASU requires an entity to disclose both gross and net information about  financial instruments and transactions eligible for offset on the Consolidated Balance Sheets as well as financial instruments and transactions  executed under a master netting or similar arrangement. The ASU was issued to enable users of financial statements to understand the effects or  potential effects of those arrangements on an entity’s financial position. This ASU was required to be applied retrospectively and was effective  for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. The adoption of this ASU did not have an  impact on our Consolidated Financial Statements. Year ended December 31  (millions of Canadian dollars, except amounts per share) 2013 2012 2011 Revenue  6,074 5,728 5,471 Net income  803 745 641 Basic and fully diluted earnings per common share  7,850 7,280 6,228 Cash dividends per common share  2,000 3,523 1,500 Cash dividends per preferred share  1.375 1.375 1.375 Consolidated Balance Sheets December 31  (millions of Canadian dollars) 2013 2012 2011 Total assets  21,625 20,811 18,836 Total long-term debt  9,057 8,479 8,008 Preferred shares  323 323 323 Other Year ended December 31  (millions of Canadian dollars) 2013 2012 2011 Total capital investments  1,394 1,454 1,447