Debt

6 Months Ended

Jun. 30, 2011

Based on the limitations of the debt to total capitalization covenant, at June 30, 2011, the Company had additional borrowing capacity, subject to availability, of up to $987 million. Additionally, at June 30, 2011, the Company could absorb a reduction to shareholders’ equity of approximately $531 million, and remain in compliance with the debt to total capitalization covenant.

In order to borrow under the Credit Agreement, there must not be any default in the Company’s covenants in the credit agreement (i.e., in addition to the two financial covenants, principally limitations on subsidiary debt, negative pledge restrictions, legal compliance requirements and maintenance of properties and insurance) and the Company’s representations and warranties in the credit agreement must be true in all material respects on the date of borrowing (i.e., principally no material adverse change or litigation likely to result in a material adverse change, since December 31, 2009, in each case, no material ERISA or environmental non-compliance and no material tax deficiency). The Company was in compliance with all covenants and no borrowings have been made at June 30, 2011.

At June 30, 2011, there were outstanding $108 million principal amount at maturity of Zero Coupon Convertible Senior Notes due 2031 (“Notes”), with an accreted value of $58 million, which has been classified as short-term debt. Holders of the Notes have the option to require the Notes be repurchased by the Company on July 20, 2011 and every five years thereafter. As of July 25, 2011, holders of $107.7 million principal amount at maturity with an accreted value of $57.9 million of Notes have required the Company to repurchase the Notes for cash.