CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS  OF CASH FLOWS  For the years ended December 31, 2013 and 2012 See accompanying notes to Consolidated Financial Statements. 54 HYDRO ONE ANNUAL REPORT 2013 Year ended December 31 (millions of Canadian dollars) 2013 2012 Operating activities  Net income  803 745 Environmental expenditures  (16) (18) Adjustments for non-cash items:  Depreciation and amortization (excluding removal costs)  597 589 Regulatory assets and liabilities  3 12 Deferred income taxes  (2) (9) Other 8 6 Changes in non-cash balances related to operations  (Note 21) 11 (31) Net cash from operating activities 1,404 1,294 Financing activities Long-term debt issued  1,185 1,085 Long-term debt retired  (600) (600) Dividends paid (218) (370) Change in bank indebtedness  (11) 3 Other  (5) (1) Net cash from financing activities 351 117 Investing activities Capital expenditures  (Note 21) Property, plant and equipment  (1,333) (1,373) Intangible assets  (79) (90) Other  27 19 Net cash used in investing activities (1,385) (1,444) Net change in cash and cash equivalents  370 (33) Cash and cash equivalents, beginning of year  195 228 Cash and cash equivalents, end of year 565 195