FORM 10-K
87
MDU RESOURCES G ROUP, INC.
NOTE 8 -- FAIR VALUE OF OTHER FINANCIAL INSTRUMENTS
The estimated fair value of the Company's long-term debt is based on quoted market prices of the same or similar issues. The estimated fair
values of the Company's natural gas and oil price swap and collar agreements reflect the estimated amounts the Company would receive or
pay to terminate the contracts at the reporting date based upon quoted market prices of comparable contracts.
The estimated fair value of the Company's long-term debt at December 31 was as follows:
2007
2006
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
(In thousands)
Long-term debt
$1,308,463
$1,293,863
$1,254,582
$1,247,439
Commodity derivative agreements -- current asset
$ 12,740
$ 12,740
$ 32,101
$ 32,101
Commodity derivative agreements -- current liability
$ (14,799)
$ (14,799)
$
--
$
--
Commodity derivative agreements -- noncurrent asset
$
3,419
$
3,419
$
--
$
--
Commodity derivative agreements -- noncurrent liability
$
(2,570)
$
(2,570)
$
--
$
--
The carrying amounts of the Company's remaining financial instruments included in current assets and current liabilities approximate their
fair values.
NOTE 9 -- SHORT-TERM BORROWINGS
Cascade has a revolving credit agreement with various banks totaling $50 million with certain provisions allowing for increased borrowings,
up to a maximum of $75 million. The $50 million credit agreement expires on December 28, 2012, with provisions allowing for an extension
of up to two years upon consent of the banks. Cascade also has a $20 million uncommitted line of credit which may be terminated by the
bank or Cascade at any time. There was $1.7 million outstanding under the Cascade credit agreements at December 31, 2007. The
borrowings are classified as short-term borrowings as Cascade intends to repay the borrowings within one year. The weighted average
interest rate for borrowings outstanding at December 31, 2007, was 4.75 percent. As of December 31, 2007, there were outstanding letters
of credit, as discussed in Note 20, of which $1.9 million reduced amounts available under the $50 million credit agreement.
In order to borrow under Cascade's $50 million credit agreement, Cascade must be in compliance with the applicable covenants and
certain other conditions. This includes a covenant not to permit, at any time, the ratio of total debt to total capitalization to be greater than
65 percent. Cascade was in compliance with these covenants and met the required conditions at December 31, 2007.
Cascade's $50 million credit agreement contains cross-default provisions. These provisions state that if Cascade fails to make any
payment with respect to any indebtedness or contingent obligation, in excess of a specified amount, under any agreement that causes
such indebtedness to be due prior to its stated maturity or the contingent obligation to become payable, the agreement will be in default.
Certain of Cascade's financing agreements and Cascade's practices limit the amount of subsidiary indebtedness.
NOTE 10 -- LONG-TERM DEBT AND INDENTURE PROVISIONS
Long-term debt outstanding at December 31 was as follows:
2007
2006
(In thousands)
First mortgage bonds and notes:
Secured Medium-Term Notes, Series A, at a weighted average rate
of 6.48%, due on dates ranging from October 1, 2008 to April 1, 2012
$
20,500
$
27,000
Senior Notes, 5.98%, due December 15, 2033
30,000
30,000
Total first mortgage bonds and notes
50,500
57,000
Senior Notes at a weighted average rate of 5.64%, due on dates ranging
from June 27, 2008 to March 8, 2037
1,064,000
1,064,500
Medium-Term Notes, at a weighted average rate of 7.72% due on dates
ranging from September 4, 2012 to March 16, 2029
81,000
--
Commercial paper at a weighted average rate of 4.95%,
supported by revolving credit agreements
61,000
122,850
Other notes, at a weighted average rate of 5.24% due on dates ranging from
September 1, 2020 to February 1, 2035
43,679
--
Term credit agreements at a weighted average rate of 5.88%,
due on dates ranging from July 1, 2008 to August 31, 2015
8,286
10,290
Discount
(2)
(58)
Total long-term debt
1,308,463
1,254,582
Less current maturities
161,682
84,034
Net long-term debt
$1,146,781
$1,170,548
