Crucial 2014 Annual Report Download - page 42

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Investing Activities
Net cash used for investing activities was $2.45 billion for 2014, which consisted primarily of cash expenditures of
$2.66 billion for property plant and equipment and $506 million for the acquisition of available-for-sale securities (net of
proceeds from sales and maturities of $557 million) offset by the use of $534 million of restricted cash in connection with the
first MMJ creditor installment payment.
We believe that to develop new product and process technologies, support future growth, achieve operating efficiencies and
maintain product quality, we must continue to invest in manufacturing technologies, facilities and capital equipment, and R&D.
We estimate that capital spending for 2015 will be approximately $3.6 billion to $4.0 billion. The actual amounts for 2015 will
vary depending on market conditions. As of August 28, 2014, we had commitments of approximately $1.18 billion for the
acquisition of property, plant and equipment, substantially all of which is expected to be paid within one year.
Financing Activities
Net cash used by financing activities was $1.95 billion for 2014, which included $3.84 billion for repayments of debt
(including $1.20 billion for the amount in excess of principal of our convertible notes), $479 million of payments on equipment
purchase contracts and $92 million of net cash received from noncontrolling interests offset by $2.21 billion of proceeds from
issuance of debt and by $265 million of proceeds from issuance of common stock under our equity plans.
2014 Debt Restructure
Throughout 2014, we reduced the dilutive effects of our convertible notes by exchanging, converting or repurchasing a
portion of these notes using cash generated from operations and proceeds from issuing non-convertible debt with near
investment-grade covenants. Approximately 90% of our Free Cash Flow (cash flows from operating activities less expenditures
for property, plant and equipment less payments on equipment purchase contracts) generated during 2014 was used for these
dilution-management activities. As a result, we eliminated convertible notes that would have been converted into 118 million
shares of our common stock.
In 2014, we initiated a series of actions to restructure our debt, including exchanges, conversions and settlements,
repurchases, issuances and early repayments. The following table presents the net effect of each of the actions:
Increase
(Decrease) in
Principal
Increase
(Decrease) in
Carrying
Value
Increase
(Decrease) in
Cash (Decrease) in Equity Loss(1)
Exchanges $ 585 $ 282 $ — $ (238) $ 49
Conversions and settlements(2) (770) (437)(1,446)(886) 130
Repurchases (320) (269)(857)(567) 23
Issuances 2,212 2,212 2,157 — —
Early repayments (336) (334)(339) — 3
$ 1,371 $ 1,454 $ (485) $ (1,691) $ 205
(1) The loss on 2014 debt restructure activities was recorded as $184 million in other non-operating expense and $21
million in interest expense in 2014.
(2) The change in carrying value includes an increase of $275 million for the reclassification of the fair value of the equity
component to debt in connection with our election to settle the conversions of the 2031B Notes in cash.
• Exchanges: Exchanged $440 million in aggregate principal amount of our 2027 Notes, 2031A Notes and 2031B
Notes into $1.03 billion principal amount at maturity of 2043G Notes.
• Conversions and Settlement: Holders of substantially all of our remaining 2014 Notes, 2027 Notes and 2031A
Notes (with an aggregate principal amount of $770 million) converted their notes and we settled the conversions
in cash for $1.45 billion.