CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS  (In Millions of New Taiwan or U.S. Dollars) Year Ended December 31 2009 2010 2011 NT$ NT$ NT$ US$ (Note 3) CASH FLOWS FROM OPERATING ACTIVITIES Consolidated net income $  44,495 $  48,558 $  48,095 $  1,589 Adjustments to reconcile net income to net cash provided by  operating activities: Provision for doubtful accounts 462 230 113 4 Depreciation and amortization 36,320 34,064 32,306 1,067 Amortization of premium (discount) of financial assets 16 38 61 2 Loss (gain) on disposal of financial instruments, net 142 157 (20) (1) Valuation loss (gain) on financial instruments, net (99) 11 37 1 Loss (gain) on disposal of property, plant and equipment, net 7 216 (298) (10) Equity in losses (earnings) of equity method investees, net 23 (151) (364) (12) Dividends received from equity investees 89 36 158 5 Loss arising from natural calamities 149 19 1 - Impairment loss on assets 110 125 148 5 Deferred income taxes 1,099 27 56 2 Changes in operating assets and liabilities: Decrease (increase) in: Financial assets held for trading 221 32 (53) (2) Trade notes and accounts receivable (1,492) (2,749) (8,313) (275) Receivables from related parties (70) (36) 144 5 Other monetary assets 350 (288) 58 2 Inventories (88) (475) (665) (22) Other current assets 510 (858) (1,046) (34) Increase (decrease) in: Trade notes and accounts payable (1,565) 2,237 2,377 79 Payables to related parties (206) (260) 650 21 Income tax payable (1,377) 257 (1,028) (34) Accrued expenses 950 954 196 7 Other current liabilities 777 2,447 2,609 86 Deferred income 422 105 (14) - Accrued pension liabilities (3,960) 73 151 5 Net cash provided by operating activities 77,285 84,769 75,359 2,490 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of designated financial assets at fair value through  profit or loss (45) (34) (113) (4) Proceeds from disposal of financial assets at fair value through  profit or loss 63 21 147 5 Acquisition of available-for-sale financial assets (9,263) (3,342) (4,325) (143) Proceeds from disposal of available-for-sale financial assets 8,097 19,195 3,945 131 Acquisition of held-to-maturity financial assets (2,100) (6,917) (6,544) (216) Proceeds from disposal of held-to-maturity financial assets 869 1,538 2,159 71 Acquisition of financial assets carried at cost (116) (318) (236) (8) Proceeds from disposal of financial assets carried at cost 302 59 66 2 Capital reduction of financial assets carried at cost ─ ─ 7 ─ Liquidating dividend 6 Capital reduction of equity investees ─ ─ 7 ─ Prepaid long-term investment (26) (66) (84) (3) Acquisition of investments accounted for using equity method (560) (35) (365) (12) Acquisition of property, plant and equipment (25,478) (24,617) (26,876) (888) Proceeds from disposal of property, plant and equipment 65 82 656 22 PART III (Continued) F-7