04-HP-876_newMDA.qxd 12/15/04 3:04 PM Page 58 Consolidated S tatements of Cash Flows 59 Years Ended September 30, 2004 2003 2002 (in thousands) OPERATING ACTIVITIES: Income from continuing operations $ 4,359 $ 17,873 $ 53,706 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation 94,425 82,513 61,447 Asset impairment charge 51,516 — — Equity in (income) loss of affiliates before income taxes (1,168) 2,290 (5,014) Amortization of deferred compensation 10 180 1,122 Gain on sales of securities (22,766) (5,529) (25,551) Non-monetary investment (gain) loss (2,521) — 1,204 Gain on sale of property, plant and equipment (5,377) (3,689) (1,392) Deferred income tax expense 5,934 41,391 21,147 Other – net (98) 336 791 Change in assets and liabilities: Accounts receivable (25,335) 1,516 24,148 Inventories 1,707 251 1,042  Prepaid expenses and other 24,142 (29,355) 24,381  Accounts payable (1,618) (11,415) (3,769) Accrued liabilities 2,870 (1,281) 955  Deferred income taxes 2,323 (166) 2,986  Other noncurrent liabilities 6,997 1,589 (5,429)  131,041 78,631 98,068  Net cash provided by operating activities 135,400 96,504 151,774  INVESTING ACTIVITIES: Capital expenditures (88,972) (246,301) (312,064) Proceeds from sale of property, plant and equipment 7,941 6,720 4,135 Purchase of investments — — (5,656) Proceeds from sale of securities 14,033 18,215 47,146 Net cash used in investing activities (66,998) (221,366) (266,439) FINANCING ACTIVITIES: Proceeds from long-term debt — 100,000 100,000 Payments on long-term debt — — (50,000) (Decrease) increase in short-term notes (30,000) 30,000 — Dividends paid (16,222) (16,026) (15,221) Proceeds from exercise of stock options 4,927 2,194 3,554 Net cash provided by (used in) financing activities (41,295) 116,168 38,333 DISCONTINUED OPERATIONS: Net cash provided by operating activities — — 62,792 Net cash (used in) investing activities — — (55,232) Cash of discontinued operations at spinoff — — (13,171) Net cash used in discontinued operations — — (5,611) Net increase (decrease) in cash and cash equivalents 27,107 (8,694) (81,943) Cash and cash equivalents, beginning of period 38,189 46,883 128,826 Cash and cash equivalents, end of period $ 65,296 $ 38,189 $ 46,883 The accompanying notes are an integral par of these statements.