Note 6 – Long-Term Debt

Carrying amounts of the Company’s long-term debt and their related estimated fair values as of June 30, 2015 and December 31, 2014 are disclosed in the following table. The fair values of the revolving credit facility (including commercial paper) and the variable-rate Industrial Development Revenue Bonds (“IDRBs”) approximate their carrying values, as they are repaid quickly (in the case of credit facility borrowings) and have interest rates that reset frequently. They are categorized as Level 1 (quoted prices for identical financial instruments) within the three-level fair value hierarchy that ranks the inputs used to measure fair value by their reliability, due to the Company’s ability to access similar debt arrangements at measurement dates with comparable terms, including variable rates. The fair values of debentures and fixed-rate IDRBs were determined utilizing a market-based valuation approach, where fair market values are determined based on evaluated pricing data, such as broker quotes and yields for similar securities adjusted for observable differences. Significant inputs used in the valuation generally include benchmark yield curves, credit ratings and issuer spreads. The external credit rating, coupon rate, and maturity of each security are considered in the valuation, as applicable. The market values of debentures and fixed-rate IDRBs are categorized as Level 2 (observable market inputs based on market prices of similar securities). The Centuri secured revolving credit and term loan facility and Centuri other debt obligations (not actively traded) are categorized as Level 3, based on significant unobservable inputs to their fair values. Since Centuri’s debt is not publicly traded, fair values for the secured revolving credit and term loan facility and other debt obligations were based on a conventional discounted cash flow methodology and utilizes current market pricing yield curves, across Centuri’s debt maturity spectrum, of other industrial bonds with an assumed credit rating comparable to the Company’s.


	June 30, 2015					December 31, 2014
	Carrying			Market		Carrying			Market
	Amount			Value		Amount			Value
(Thousands of dollars)
Debentures:
Notes, 4.45%, due 2020	$	125,000		$	133,183	$	125,000		$	133,403
Notes, 6.1%, due 2041		125,000			146,568		125,000			157,290
Notes, 3.875%, due 2022		250,000			259,723		250,000			262,030
Notes, 4.875%, due 2043		250,000			256,505		250,000			280,903
8% Series, due 2026		75,000			99,431		75,000			102,296
Medium-term notes, 7.59% series, due 2017		25,000			27,063		25,000			27,573
Medium-term notes, 7.78% series, due 2022		25,000			30,705		25,000			31,144
Medium-term notes, 7.92% series, due 2027		25,000			32,706		25,000			33,695
Medium-term notes, 6.76% series, due 2027		7,500			8,896		7,500			9,156
Unamortized discount		(5,046	)				(5,223	)

		902,454					902,277

Revolving credit facility and commercial paper		30,000			30,000		150,000			150,000

Industrial development revenue bonds:
Variable-rate bonds:
Tax-exempt Series A, due 2028		50,000			50,000		50,000			50,000
2003 Series A, due 2038		50,000			50,000		50,000			50,000
2008 Series A, due 2038		50,000			50,000		50,000			50,000
2009 Series A, due 2039		50,000			50,000		50,000			50,000
Fixed-rate bonds:
5.25% 2003 Series D, due 2038		20,000			20,103		20,000			20,277
5.00% 2004 Series B, due 2033		—			—		31,200			31,223
4.85% 2005 Series A, due 2035		100,000			100,629		100,000			100,071
4.75% 2006 Series A, due 2036		24,855			25,005		24,855			25,399
Unamortized discount		(1,645	)				(1,943	)

		343,210					374,112

Centuri secured revolving credit and term loan facility		234,598			235,542		199,267			200,341
Centuri other debt obligations		31,471			31,749		31,128			31,127

		1,541,733					1,656,784
Less: current maturities		(20,050	)				(19,192	)

Long-term debt, less current maturities	$	1,521,683				$	1,637,592

In March 2015, the Company amended its $300 million credit facility. The facility was previously scheduled to expire in March 2019 and was extended to March 2020. The Company will continue to use $150 million of the facility as long-term debt and the remaining $150 million for working capital purposes. Interest rates for the credit facility are calculated at either the London Interbank Offered Rate (“LIBOR”) or an “alternate base rate,” plus in each case an applicable margin that is determined based on the Company’s senior unsecured debt rating. At June 30, 2015, the applicable margin is 1% for loans bearing interest with reference to LIBOR and 0% for loans bearing interest with reference to the alternative base rate. At June 30, 2015, $5 million was outstanding on the credit facility and $25 million was outstanding on the commercial paper program.

In May 2015, the Company redeemed at par the $31.2 million 5.00% 2004 Series B IDRBs originally due in 2033. The Company facilitated the redemption primarily from cash on hand and borrowings under its $300 million credit facility.

Centuri has a $300 million secured revolving credit and term loan facility that is scheduled to expire in October 2019. At June 30, 2015, $235 million in borrowings were outstanding on the Centuri facility. Centuri assets securing the facility at June 30, 2015 totaled $492 million.