Year ended December 31
2008 2007 2006
Net (increase) decrease in operating working capital was composed of the following:  
Decrease (increase) in accounts and notes receivable $6,030 $(3,867) $17
Increase in inventories (1,545) (749) (536)
Increase in prepaid expenses and other current assets (621) (370) (31)
(Decrease) increase in accounts payable and accrued liabilities (4,628) 4,930 1,246
(Decrease) increase in income and other taxes payable (909) 741 348
Net (increase) decrease in operating working capital $(1,673) $685 $1,044
Net cash provided by operating activities includes the following cash payments for interest and income taxes:  
Interest paid on debt (net of capitalized interest) $– $203 $470
Income taxes $19,130 $12,340 $13,806
Net sales of marketable securities consisted of the following gross amounts:
Marketable securities sold $3,719 $2,160 $1,413
Marketable securities purchased $(3,236) $(1,975) $(1,271)
Net sales of marketable securities $483 $185 $142

In accordance with the cash-flow classification requirements of FAS 123R, Share-Based Payment, the "Net decrease in operating working capital" includes reductions of $106, $96 and $94 for excess income tax benefits associated with stock options exercised during 2008, 2007 and 2006, respectively. These amounts are offset by "Net purchases of treasury shares."

In 2008, "Net purchases of other short-term investments" consist of $367 in restricted cash associated with capital-investment projects at the company's Pascagoula, Mississippi refinery and the Angola liquefied natural gas project that was invested in short-term marketable securities and reclassified from "Cash and cash equivalents" to "Deferred charges and other assets" in the Consolidated Balance Sheet. In 2007, the company issued a $650 tax exempt Mississippi Gulf Opportunity Zone Bond as a source of funds for the Pascagoula Refinery project.

The "Net purchases of treasury shares" represents the cost of common shares less the cost of shares issued for share-based compensation plans. Purchases totaled $8,011, $7,036 and $5,033 in 2008, 2007 and 2006, respectively.

The Consolidated Statement of Cash Flows for 2008 excludes changes to the Consolidated Balance Sheet that did not affect cash. "Net purchases of treasury shares" excludes $680 of treasury shares acquired in exchange for a U.S. upstream property and $280 in cash. The carrying value of this property in "Properties, plant and equipment" on the Consolidated Balance Sheet was not significant. The "Increase in accounts payable and accrued liabilities" excludes a $2,450 increase in "Accrued liabilities" that was offset to "Properties, plant and equipment" on the Consolidated Balance Sheet. This amount related to accruals associated with upstream operating agreements outside the United States. "Capital expenditures" excludes a $1,400 increase in "Properties, plant and equipment" (PPE) related to the acquisition of an additional interest in an equity affiliate that required a change to the consolidated method of accounting for the investment during 2008. This addition to PPE was offset primarily by reductions in "Investments and advances" and working capital and an increase in "Noncurrent deferred income tax" liabilities. Refer also to Note 24 for a discussion of revisions to the company's AROs that also did not involve cash receipts or payments for the three years ending December 31, 2008.

The major components of "Capital expenditures" and the reconciliation of this amount to the reported capital and exploratory expenditures, including equity affiliates, are presented in the following table:

Year ended December 31
2008 2007 2006
*

Net of noncash additions of $5,153 in 2008, $3,560 in 2007 and $440 in 2006.
Additions to properties, plant and equipment* $18,495 $16,127 $12,800
Additions to investments 1,051 881 880
Current-year dry hole expenditures 320 418 400
Payments for other liabilities and assets, net (200) (748) (267)
Capital expenditures 19,666 16,678 13,813
Expensed exploration expenditures 794 816 844
Assets acquired through capital lease obligations and other financing obligations 9 196 35
Capital and exploratory expenditures, excluding equity affiliates 20,469 17,690 14,692
Equity in affiliates' expenditures 2,306 2,336 1,919
Capital and exploratory expenditures, including equity affiliates $22,775 $20,026 $16,611