Dow Chemical 2015 Annual Report Download - page 62

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LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $8,577 million at December 31, 2015 and $5,654 million at December 31,
2014, of which $6,494 million at December 31, 2015 and $3,633 million at December 31, 2014 was held by subsidiaries in
foreign countries, including United States territories. For each of its foreign subsidiaries, the Company makes an assertion
regarding the amount of earnings intended for permanent reinvestment, with the balance available to be repatriated to the
United States. The cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries'
operational activities and future foreign investments. A deferred tax liability has been accrued for the funds that are available to
be repatriated to the United States. At December 31, 2015, management believed that sufficient liquidity was available in the
United States. However, in the unusual event that additional foreign funds are needed in the United States, the Company has the
ability to repatriate additional funds. The repatriation could result in an adjustment to the tax liability after considering available
foreign tax credits and other tax attributes. It is not practicable to calculate the unrecognized deferred tax liability on
undistributed foreign earnings.
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 2015 2014 2013
Cash provided by (used in):
Operating activities $ 7,516 $ 6,502 $ 7,823
Investing activities (1,350) (3,105) (1,469)
Financing activities (3,041) (3,583) (4,731)
Effect of exchange rate changes on cash (202) (100) (1)
Summary
Increase (decrease) in cash and cash equivalents $ 2,923 $ (286) $ 1,622
Cash and cash equivalents at beginning of year 5,654 5,940 4,318
Cash and cash equivalents at end of year $ 8,577 $ 5,654 $ 5,940
Cash Flows from Operating Activities
Cash provided by operating activities increased in 2015 compared with 2014, primarily due to improvements in working capital
and increased earnings. Cash provided by operating activities decreased in 2014 compared with 2013, which reflected the
absence of the K-Dow arbitration award.
Net Working Capital at December 31
In millions 2015 2014
Current assets (1) $ 24,475 $ 24,255
Current liabilities (1) 11,215 11,581
Net working capital $ 13,260 $ 12,674
Current ratio 2.18:1 2.09:1
Days-sales-outstanding-in-receivables 47 46
Days-sales-in-inventory 72 69
(1) Presented in accordance with newly implemented ASU 2015-03. See
Note 2 to the Consolidated Financial Statements for further information.
Net working capital increased from December 31, 2014 to December 31, 2015, principally due to an increase in cash and cash
equivalents and a reduction in accounts payable which was partially offset by a reduction in inventories and accounts
receivable. At December 31, 2015, trade receivables were $4.1 billion, down from $4.7 billion at December 31, 2014. Days-
sales-outstanding-in-receivables (excluding the impact of sales of receivables) was 47 days at December 31, 2015, up slightly
compared with December 31, 2014. At December 31, 2015, total inventories were $6.9 billion, down from $8.1 billion at
December 31, 2014, due to a reduction in volume from divestitures and declining feedstock and raw material costs. Days-sales-
in-inventory at December 31, 2015 was 72 days compared with 69 days at December 31, 2014, reflecting the impact of the
split-off of the chlorine value chain as these businesses traditionally had lower than average days-sales-in-inventory.
Cash Flows from Investing Activities
Cash used in investing activities in 2015 was primarily for capital expenditures; purchases of investments, including the
repayment of outstanding loans issued under company-owned life insurance policies; and investments in and loans made to
nonconsolidated affiliates, primarily with Sadara. This was partially offset by proceeds received from divestitures, including the