FORM 10-K

31

MDU RESOURCES G ROUP, INC.

PART I

Forward-Looking Statements

This Form 10-K contains forward-looking statements within the meaning of Section 21E of the Exchange Act. Forward-looking statements

are all statements other than statements of historical fact, including without limitation those statements that are identified by the words

"anticipates," "estimates," "expects," "intends," "plans," "predicts" and similar expressions, and include statements concerning plans,

objectives, goals, strategies, future events or performance, and underlying assumptions (many of which are based, in turn, upon further

assumptions) and other statements that are other than statements of historical facts. From time to time, the Company may publish

or otherwise make available forward-looking statements of this nature, including statements contained within Item 7 -- MD&A --

Prospective Information.

Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from

those expressed. The Company's expectations, beliefs and projections are expressed in good faith and are believed by the Company

to have a reasonable basis, including without limitation, management's examination of historical operating trends, data contained in the

Company's records and other data available from third parties. Nonetheless, the Company's expectations, beliefs or projections may

not be achieved or accomplished.

Any forward-looking statement contained in this document speaks only as of the date on which the statement is made, and the Company

undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances that occur after the

date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is

not possible for management to predict all of the factors, nor can it assess the effect of each factor on the Company's business or the

extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-

looking statement. All forward-looking statements, whether written or oral and whether made by or on behalf of the Company, are expressly

qualified by the risk factors and cautionary statements in this Form 10-K, including statements contained within Item 1A -- Risk Factors.

Items 1 and 2. Business and Properties

GENERAL

The Company is a diversified natural resource company, which was incorporated under the laws of the state of Delaware in 1924. Its

principal executive offices are at 1200 West Century Avenue, P.O. Box 5650, Bismarck, North Dakota 58506-5650, telephone (701) 530-1000.

Montana-Dakota, through the electric and natural gas distribution segments, generates, transmits and distributes electricity and distributes

natural gas in Montana, North Dakota, South Dakota and Wyoming. Great Plains distributes natural gas in western Minnesota and

southeastern North Dakota. Cascade distributes natural gas in Washington and Oregon. These operations also supply related value-added

products and services.

The Company, through its wholly owned subsidiary, Centennial, owns WBI Holdings (comprised of the pipeline and energy services and the

natural gas and oil production segments), Knife River (construction materials and contracting segment -- formerly construction materials

and mining), MDU Construction Services (construction services segment), Centennial Resources and Centennial Capital (both reflected in

the Other category).

The Company's equity method investment in the Brazilian Transmission Lines, as discussed in Item 8 -- Note 4, is reflected in the

Other category.

As discussed in Item 8 -- Note 3, the Company sold its domestic independent power production assets in the third quarter of 2007.

As of December 31, 2007, the Company had 12,293 employees with 161 employed at MDU Resources Group, Inc., 900 at Montana-Dakota,

35 at Great Plains, 376 at Cascade, 570 at WBI Holdings, 4,905 at Knife River, 5,343 at MDU Construction Services and three at Centennial

Resources. The number of employees at certain Company operations fluctuates during the year depending upon the number and size of

construction projects. The Company considers its relations with employees to be satisfactory.

At Montana-Dakota and Williston Basin, 437 and 79 employees, respectively, are represented by the IBEW. Labor contracts with such

employees are in effect through May 30, 2011, and March 31, 2008, for Montana-Dakota and Williston Basin, respectively. Williston Basin

is in negotiations on its labor contract.

At Cascade, 210 employees are represented by the ICWU. Labor contracts with such employees extend to April 1, 2009, and remain in

force thereafter from year to year unless terminated by either party.

Knife River has 43 labor contracts that represent approximately 900 of its construction materials employees. Knife River is in negotiations

on six of its labor contracts.