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In <strong>2007</strong> and 2006, we issued $231 million and $126 million, respectively, in credit memoranda. These credit amounts are not included<br />
in the above amounts and were applied against customer receivables. Customer deposit liabilities were $531 million and $633 million<br />
at December 31, <strong>2007</strong> and 2006, respectively. In 2008, we expect to issue approximately $190 million in credit memoranda.<br />
Restructuring<br />
During <strong>2007</strong>, 2006, and 2005, we made payments of $39 million, $15 million, and $25 million, respectively, related to employee<br />
severance and other exit costs resulting from restructuring actions. Cash payments for employee-related costs will be substantially<br />
completed by the end of 2008, while payments for exit activities will be substantially completed by the end of 2010.<br />
Key Balance Sheet Data<br />
At December 31, <strong>2007</strong>, cash, cash equivalents and short-term investments totaled $3.5 billion, compared with $3.2 billion at<br />
December 31, 2006. The increase from December 31, 2006, was primarily due to an increase in operating cash flows.<br />
Balance sheet and working capital measures are provided in the following table (dollars in millions):<br />
As of December 31,<br />
<strong>2007</strong> 2006<br />
Working capital $2,782 $2,479<br />
Working capital, excluding cash, cash equivalents, and short-term investments $ (734) $ (688)<br />
Current ratio 2.1:1 2.1:1<br />
Trade accounts receivable, net of allowances $ 856 $ 746<br />
Days sales outstanding 50 48<br />
Inventories $ 631 $ 639<br />
Inventory turns 4.7 4.6<br />
Days payable outstanding (1) 64 81<br />
Long-term debt $1,514 $1,696<br />
Total debt to total capital 14% 19%<br />
(1) Includes trade payables only.<br />
Credit Ratings<br />
As of February 15, 2008, our credit ratings were as follows:<br />
RATING AGENCY<br />
Rating<br />
Long-Term Debt<br />
Outlook<br />
Last Update<br />
Fitch BBB+ Stable<br />
June 29, <strong>2007</strong><br />
Standard & Poor’s BBB+ Stable<br />
July 2, <strong>2007</strong><br />
Moody’s Baa1 Stable<br />
June 19, <strong>2007</strong><br />
Management Assessment of Liquidity<br />
Our major source of funding for 2008 and beyond will be our operating cash flow, and our existing balances of cash, cash equivalents<br />
and short term investments. From time to time, we may issue debt securities to refinance debt securities maturing in the next few<br />
years. We believe we have sufficient liquidity for the next several years to fund operations, the asbestos settlement, research and<br />
development, capital expenditures, scheduled debt repayments, dividend payments, and our stock repurchase program.<br />
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