Minicase 3 Didde Industries, Inc.}

Presented below is the long-term debt portion of the notes to the financial statements of Didde Industries, Inc.

Certain borrowings are collateralized by property, plant, and equipment. Maintenance of specified minimum working capital (current assets less liabilities) and stockholders' equity levels, and specified maximum debt ratios and investments are also required.
Long-term debt maturities for the 4 years after December 31,1999 , are \(\$ 8.7\) million in 2000 , \(\$ 8.0\) million in 2001, \(\$ 8.0\) million in 2002, and \(\$ 8.2\) million in 2003 .
\section*{Instructions}

(a) Indicate how much long-term debt is outstanding and what different types of debt Didde Industries reports.

(b) Why do you think the loan agreement contains debt covenants requiring minimum working capital and stockholders' equity levels, and specified maximum debt ratios and maximum limits on investments?

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DIDDE INDUSTRIES, INC. Notes to the Financial Statements Long-Term Debt Long-term debt is summarized as follows (in thousands): December 31, 1998 Unsecured variable interest rate note (weighted average interest rate of 9.3% and 9.6% at December 31, 1998 and 1997, respectively) due in quarterly installments through 2000 9.75% first mortgage bonds secured by a lien on phosphate rock reserves, due $7.0 million annually through 2003 8.625% to 9.875% mortgage notes secured by various distribution facilities, due monthly through 2010 Total long-term debt Less: Current portion $ 4,000 40,000 13,023 57,023 15,574 $41,449