Dow Chemical 2015 Annual Report Download - page 63

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divestitures of ANGUS Chemical Company and the AgroFresh business, proceeds from the sale of the Company's interest in
MEGlobal and proceeds from sales and maturities of investments. Cash used in investing activities in 2014 was primarily for
capital expenditures which was partially offset by proceeds received on the sale-leaseback of assets, including a significant
portion of the Company's North American railcar fleet. Cash used in investing activities in 2013 was primarily for capital
expenditures which was partially offset by proceeds received from the sale of businesses and assets, including the sale of the
Polypropylene Licensing and Catalysts business in the fourth quarter of 2013. Capital spending in 2015, 2014 and 2013
included spending related to certain U.S. Gulf Coast investment projects including an on-purpose propylene production facility,
a world-scale ethylene production facility, an ELITE™ Polymer production facility, a NORDEL™ Metallocene EPDM
production facility, and a Low Density Polyethylene (LDPE) production facility, all aligned with the Company's Performance
Plastics segment.
In the first quarter of 2015, a $193 million note receivable from Sadara was converted to equity. During 2015, the Company
loaned an additional $753 million to Sadara, of which $280 million was converted to equity. Approximately $460 million of the
outstanding note receivable is expected to be converted to equity in the first quarter of 2016. The Company expects to loan an
additional $1.2 billion to Sadara during 2016. All or a portion of the outstanding loans to Sadara could potentially be converted
into equity in future periods. See Note 9 to the Consolidated Financial Statements for additional information.
The following table summarizes the Company's capital expenditures, which includes capital expenditures of consolidated
variable interest entities, along with the approximate percentage of spending by project type. The Company expects capital
spending in 2016 to be approximately $3.7 billion.
Capital Expenditures Summary
In millions 2015 2014 2013
Capital expenditures $ 3,703 $ 3,572 $ 2,302
Spending by project type:
Projects related to additional capacity for new and existing products 68% 68% 55%
Projects related to environmental protection, safety, loss prevention and
industrial hygiene 9% 10% 14%
Other (primarily shared infrastructure and plant maintenance/health) 23% 22% 31%
See Note 26 to the Consolidated Financial Statements for capital expenditures by operating segment.
Cash Flows from Financing Activities
Cash used in financing activities in 2015 included dividends paid to stockholders, $1.2 billion in purchases of treasury stock,
and payments on long-term debt, including the early redemption of $724 million of InterNotes which was partially offset by
proceeds from the issuance of long-term debt, including $875 million related to the split-off of the chlorine value chain. Cash
used in financing activities in 2014 included purchases of treasury stock, which totaled $4.2 billion and resulted in the
completion of the Company's initial $4.5 billion share repurchase program, and increased dividends paid to stockholders which
was partially offset by proceeds received from the issuance of new debt, including $2 billion issued in the third quarter of 2014.
Cash used in financing activities in 2013 included dividends paid to stockholders; purchases of treasury stock; payments on
short- and long-term debt, including the early redemption of more than $3 billion in notes and InterNotes; partially offset by
proceeds received from the issuance of new debt. See Notes 17 and 22 to the Consolidated Financial Statements for additional
information related to the issuance or retirement of debt and the Company's share repurchase program and Note 6 for
information on the split-off of the chlorine value chain.
Free Cash Flow
The Company's management believes that free cash flow, a non-GAAP financial measure, provides relevant and meaningful
information to investors about the Company's ability to fund its obligations using its primary source of incremental liquidity -
cash provided by operating activities. This financial measure is not recognized in accordance with U.S. GAAP and should not
be viewed as an alternative to U.S. GAAP financial measures of performance.
Reconciliation of Free Cash Flow to "Cash
Provided by Operating Activities"
In millions 2015 2014 2013
Cash provided by operating activities $ 7,516 $ 6,502 $ 7,823
- Capital expenditures (3,703) (3,572) (2,302)
Free Cash Flow $ 3,813 $ 2,930 $ 5,521