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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Capital resources were strengthened in 2008 as shown by the increase in the Company’s net worth from $11.3
billion to $13.5 billion. The Company’s ratio of long-term debt to total capital (the sum of the Company’s longterm
debt and shareholders’ equity) was 36% at June 30, 2008, and 30% at June 30, 2007. This ratio is a measure
of the Company’s long-term liquidity and is an indicator of financial flexibility. The Company currently has $7.4
billion of commercial paper and commercial bank lines available to meet seasonal cash requirements of which $5.2
billion are committed and $2.2 billion are uncommitted. At June 30, 2008, the Company had $3.1 billion of shortterm
debt outstanding. Standard & Poor’s, Moody’s, and Fitch rate the Company’s commercial paper as A-1, P-1,
and F1, respectively, and rate the Company’s long-term debt as A, A2, and A, respectively. In addition to the cash
flow generated from operations, the Company has access to equity and debt capital through numerous alternatives
from public and private sources in domestic and international markets.
The Company has outstanding $1.15 billion principal amount of convertible senior notes. As of June 30, 2008,
none of the conditions permitting conversion of the notes had been satisfied. As of June 30, 2008, the market price
of the Company’s common stock was not greater than the exercise price of the purchased call options or warrants
related to the convertible senior notes.
In June 2008, the Company issued $1.75 billion of debentures as a component of Equity Units. The Equity Units
are a combination of (a) debt and (b) forward contracts for the holder to purchase the Company’s common stock.
The purchase contracts obligate the holder to purchase from the Company, no later than June 1, 2011, for a price of
$50 in cash, a certain number of shares, ranging from 1.0453 shares to 1.2544 shares, of the Company’s common
stock, based on a formula established in the contract.
Contractual Obligations and Off-Balance Sheet Arrangements
In the normal course of business, the Company enters into contracts and commitments which obligate the Company
to make payments in the future. The following table sets forth the Company’s significant future obligations by time
period. Purchases include commodity-based contracts entered into in the normal course of business, which are
further described in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” energy-related
purchase contracts entered into in the normal course of business, and other purchase obligations related to the
Company’s normal business activities. Where applicable, information included in the Company’s consolidated
financial statements and notes is cross-referenced in this table.
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