Dow Chemical 2009 Annual Report Download - page 86

Table of Contents
LIQUIDITY AND CAPITAL RESOURCES
The Company’s cash flows from operating, investing and financing activities, as reflected in the Consolidated Statements of Cash Flows, are summarized in
the following table:
Cash Flow Summary
In millions 2009 2008 2007
Cash provided by (used in):
Operating activities $ 2,075 $ 4,711 $ 4,484
Investing activities (14,767) (2,737) (2,858)
Financing activities 12,659 (978) (2,728)
Effect of exchange rate changes on cash 79 68 81
Net increase (decrease) in cash and cash equivalents $ 46 $ 1,064 $ (1,021)
Cash provided by operating activities in 2009 declined compared with 2008 due to an increase in working capital requirements primarily driven by an
increase in trade accounts receivable. The increase in trade accounts receivable reflected the increase in sales toward the end of 2009 versus the end of 2008
primarily due to the acquisition of Rohm and Haas in 2009. Despite significantly lower earnings in 2008, cash provided by operating activities improved
compared with 2007 due to a reduction in working capital requirements, largely the result of the Company’s intense focus on cost control and cash generation
in the fourth quarter of 2008 in response to the global economic downturn.
Cash used in investing activities in 2009 increased over 2008, reflecting the April 1, 2009 acquisition of Rohm and Haas for $15,681 million and the
purchase of a previously leased ethylene plant in Canada for $713 million, partially offset by the proceeds from the sale of the Company’s interest in
nonconsolidated affiliates (TRN for $742 million and OPTIMAL for $660 million), net proceeds from the sale of Morton ($1,576 million) and lower capital
expenditures. Cash used in investing activities in 2008 was down slightly compared with 2007, as an increase in capital expenditures of $201 million and an
increase in investments in nonconsolidated affiliates (including $69 million in Americas Styrenics LLC and $161 million additional investment in two
Kuwaiti joint ventures) was more than offset by a lower level of investing in consolidated companies, despite acquisitions of several small agricultural seed
companies totaling $100 million in 2008.
Cash provided by financing activities increased significantly in 2009, reflecting the funding for the acquisition of Rohm and Haas as discussed in
further detail below, partially offset by the redemption of the preferred partnership units and accrued dividends of Tornado Finance V.O.F. of $520 million.
Cash used in financing activities in 2008 was down significantly compared with 2007, as cash generated by proceeds from issuances of long-term debt in
excess of payments on long-term debt and a decrease in purchases of treasury stock more than offset a reduction in the change in proceeds from the issuance of
promissory notes under the Company’s U.S. commercial paper program and lower proceeds from the sales of common stock (related to the exercise of stock
options and the Employees’ Stock Purchase Plan).
Despite the still challenging economic market environment, management expects that the Company will continue to have sufficient liquidity and financial
flexibility to meet all of its business obligations.
The Company has undertaken several restructuring plans during the past three years as follows:
·On December 3, 2007, the Board of Directors approved a restructuring plan (the “2007 Plan”) that included the shutdown of a number of assets and
organizational changes within targeted functions. These restructuring activities were substantially complete at the end of 2009.
·On December 5, 2008, the Board of Directors approved a restructuring plan (the “2008 Plan”) that included the shutdown of a number of facilities
and a global workforce reduction. These restructuring activities are targeted to be completed by the end of 2010.
·On June 30, 2009, following the acquisition of Rohm and Haas, the Board of Directors approved a restructuring plan (the “2009 Plan”) that includes
the elimination of approximately 2,500 positions and the shutdown of a number of manufacturing facilities. These restructuring activities are
scheduled to be completed primarily during the next two years.
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