FORM 10-K

72

MDU RESOURCES G ROUP, INC.

PART II

CONSOLIDATED STATEMENTS OF INCOME

Years ended December 31,

2007

2006

2005

(In thousands, except per share amounts)

Operating revenues:

Electric, natural gas distribution and pipeline and energy services

$1,095,709

$ 889,286

$ 950,324

Construction services, natural gas and oil production,

construction materials and contracting, and other

3,152,187

3,115,253

2,453,599

4,247,896

4,004,539

3,403,923

Operating expenses:

Fuel and purchased power

69,616

67,414

63,591

Purchased natural gas sold

377,404

268,981

329,190

Operation and maintenance:

Electric, natural gas distribution and pipeline and energy services

215,587

183,992

155,323

Construction services, natural gas and oil production,

construction materials and contracting, and other

2,572,864

2,577,755

2,080,451

Depreciation, depletion and amortization

301,932

256,531

219,440

Taxes, other than income

153,373

126,791

117,405

3,690,776

3,481,464

2,965,400

Operating income

557,120

523,075

438,523

Earnings from equity method investments

19,609

10,838

20,192

Other income

8,318

12,071

7,209

Interest expense

72,237

72,095

54,384

Income before income taxes

512,810

473,889

411,540

Income taxes

190,024

166,111

146,249

Income from continuing operations

322,786

307,778

265,291

Income from discontinued operations, net of tax (Note 3)

109,334

7,979

9,792

Net income

432,120

315,757

275,083

Dividends on preferred stocks

685

685

685

Earnings on common stock

$ 431,435

$ 315,072

$ 274,398

Earnings per common share -- basic:

Earnings before discontinued operations

$

1.77

$

1.70

$

1.48

Discontinued operations, net of tax

.60

.05

.06

Earnings per common share -- basic

$

2.37

$

1.75

$

1.54

Earnings per common share -- diluted:

Earnings before discontinued operations

$

1.76

$

1.69

$

1.47

Discontinued operations, net of tax

.60

.05

.06

Earnings per common share -- diluted

$

2.36

$

1.74

$

1.53

Dividends per common share

$

.5600

$

.5234

$

.4934

Weighted average common shares outstanding -- basic

181,946

180,234

178,365

Weighted average common shares outstanding -- diluted

182,902

181,392

179,490

The accompanying notes are an integral part of these consolidated financial statements.