FORM 10-K
64
MDU RESOURCES G ROUP, INC.
PART II
Cash flows provided by financing activities in 2006 decreased $198.8 million compared to the comparable 2005 period, primarily the result
of an increase in repayment of long-term debt of $208.7 million, partially offset by an increase in proceeds from the issuance of common
stock of $10.8 million.
Defined benefit pension plans
The Company has qualified noncontributory defined benefit pension plans (Pension Plans) for certain employees. Plan assets consist of
investments in equity and fixed-income securities. Various actuarial assumptions are used in calculating the benefit expense (income) and
liability (asset) related to the Pension Plans. Actuarial assumptions include assumptions about the discount rate, expected return on plan
assets and rate of future compensation increases as determined by the Company within certain guidelines. At December 31, 2007, certain
Pension Plans' accumulated benefit obligations exceeded these plans' assets by approximately $600,000. Pretax pension expense reflected
in the years ended December 31, 2007, 2006 and 2005, was $6.5 million, $7.0 million and $6.6 million, respectively. The Company's
pension expense is currently projected to be approximately $8.0 million to $9.0 million in 2008. Funding for the Pension Plans is actuarially
determined. The minimum required contributions for 2007, 2006 and 2005 were approximately $1.8 million, $2.6 million and $1.6 million,
respectively. For further information on the Company's Pension Plans, see Item 8 -- Note 17.
Capital expenditures
The Company's capital expenditures for 2005 through 2007 and as anticipated for 2008 through 2010 are summarized in the following
table, which also includes the Company's capital needs for the retirement of maturing long term debt.
Actual
Estimated*
2005
2006
2007
2008
2009
2010
(In millions)
Capital expenditures:
Electric
$ 27
$ 39
$
91
$
95
$186
$146
Natural gas distribution
17
15
500
65
52
44
Construction services
51
32
18
19
12
13
Pipeline and energy services
36
43
39
53
38
18
Natural gas and oil production
330
329
284
605
392
385
Construction materials and contracting
162
141
190
110
105
105
Other
15
2
2
1
1
1
Net proceeds from sale or disposition of property**
(41)
(31)
(25)
(7)
(2)
(2)
Net capital expenditures before discontinued operations
597
570
1,099
941
784
710
Discontinued operations
133
33
(548)
--
--
--
Net capital expenditures
730
603
551
941
784
710
Retirement of long-term debt
107
316
232
162
73
7
$837
$919
$ 783
$1,103
$857
$717
* With the exception of the acquisition of approximately $235 million of natural gas and oil properties in the first quarter of 2008, the estimated 2008 through 2010 capital
expenditures reflected in the above table exclude potential future acquisitions and other growth opportunities which are dependent upon the availability of economic opportunities
and, as a result, capital expenditures may vary significantly from the above estimates.
** The estimated 2008 through 2010 net proceeds exclude proceeds related to the disposal of unidentified assets.
Capital expenditures for 2007, 2006 and 2005, in the preceding table include noncash transactions, including the issuance of the
Company's equity securities in connection with acquisitions and the outstanding indebtedness related to the 2007 Cascade acquisition.
The noncash transactions were $217.3 million in 2007, immaterial in 2006 and $46.5 million in 2005.
In 2007, the Company acquired construction materials and contracting businesses in North Dakota, Texas and Wyoming, a construction
services business in Nevada, and Cascade, a natural gas distribution business. The total purchase consideration for these businesses and
properties and purchase price adjustments with respect to certain other acquisitions made prior to 2007, consisting of the Company's
common stock and cash, was $526.3 million.
The 2007 capital expenditures, including those for the previously mentioned acquisitions and retirements of long-term debt, were met from
internal sources, the issuance of long-term debt and the Company's equity securities. Estimated capital expenditures for the years 2008
through 2010 include those for:
· System upgrades
· Routine replacements
· Service extensions
· Routine equipment maintenance and replacements
· Buildings, land and building improvements
