FORM 10-K
81
MDU RESOURCES G ROUP, INC.
SFAS No. 157 In September 2006, the FASB issued SFAS No. 157. SFAS No. 157 defines fair value, establishes a framework for measuring
fair value and expands disclosures about fair value measurements. The standard applies under other accounting pronouncements that
require or permit fair value measurements with certain exceptions. SFAS No. 157 was effective for the Company on January 1, 2008. The
adoption of SFAS No. 157 did not have a material effect on the Company's financial position or results of operations.
SFAS No. 159 In February 2007, the FASB issued SFAS No. 159. SFAS No. 159 permits entities to choose to measure many financial
instruments and certain other items at fair value that are not currently required to be measured at fair value. The standard also establishes
presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes
for similar types of assets and liabilities. SFAS No. 159 was effective for the Company on January 1, 2008, and at adoption, the Company
elected to measure its investments in certain fixed-income and equity securities at fair value in accordance with SFAS No. 159. These
investments prior to January 1, 2008, were accounted for as available-for-sale investments and recorded at fair value with any unrealized
gains or losses, net of income taxes, recorded in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets until
realized. Upon the adoption of SFAS No. 159, the unrealized gain on the available-for-sale investments of $405,000 (after tax) was recorded
as an increase to the January 1, 2008, balance of retained earnings. The adoption of SFAS No. 159 did not have a material effect on the
Company's financial position or results of operations.
SFAS No. 141 (revised) In December 2007, the FASB issued SFAS No. 141 (revised). SFAS No. 141 (revised) requires an acquirer to
recognize and measure the assets acquired, liabilities assumed and any noncontrolling interests in the acquiree at the acquisition date,
measured at their fair values as of that date, with limited exception. In addition, SFAS No. 141 (revised) requires that acquisition-related
costs will be generally expensed as incurred. SFAS No. 141 (revised) also expands the disclosure requirements for business combinations.
SFAS No. 141 (revised) will be effective for the Company on January 1, 2009. The Company is evaluating the effects of the adoption of
SFAS No. 141 (revised).
SFAS No. 160 In December 2007, the FASB issued SFAS No. 160. SFAS No. 160 establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 will be effective for the Company on
January 1, 2009. The Company is evaluating the effects of the adoption of SFAS No. 160.
Comprehensive income
Comprehensive income is the sum of net income as reported and other comprehensive income (loss). The Company's other comprehensive
income (loss) resulted from gains (losses) on derivative instruments qualifying as hedges, pension liability adjustments, foreign currency
translation adjustments and gains on available-for-sale investments. For more information on derivative instruments, see Note 7.
The components of other comprehensive income (loss), and their related tax effects for the years ended December 31, 2007, 2006 and
2005, were as follows:
2007
2006
2005
(In thousands)
Other comprehensive income (loss):
Net unrealized gain (loss) on derivative instruments qualifying as hedges:
Net unrealized gain (loss) on derivative instruments arising during the period,
net of tax of $3,989, $12,359 and $(16,391) in 2007, 2006 and 2005, respectively
$ 6,508
$ 19,743
$(26,167)
Less: Reclassification adjustment for gain (loss) on derivative instruments included in
net income, net of tax of $12,504, $(16,194) and $(2,734) in 2007, 2006 and 2005, respectively
20,013
(25,867)
(4,367)
Net unrealized gain (loss) on derivative instruments qualifying as hedges
(13,505)
45,610
(21,800)
Pension liability adjustment, net of tax of $1,835, $1,122 and $353
in 2007, 2006 and 2005, respectively
3,012
1,761
574
Foreign currency translation adjustment, net of tax of $3,606 in 2007
7,177
(1,585)
(1,099)
Net unrealized gain on available-for-sale investments, net of tax of $270 in 2007
405
--
--
Total other comprehensive income (loss)
$ (2,911)
$ 45,786
$(22,325)
The after-tax components of accumulated other comprehensive loss as of December 31, 2007, 2006 and 2005, were as follows:
Net Unrealized
Net
Gain (Loss)
Unrealized
Total
on Derivative
Foreign
Gain on
Accumulated
Instruments
Pension
Currency
Available-
Other
Qualifying
Liability
Translation
for-sale
Comprehensive
as Hedges
Adjustment
Adjustment
Investments
Loss
(In thousands)
Balance at December 31, 2005
$(26,167)
$ (7,651)
$
2
$
--
$(33,816)
Balance at December 31, 2006
$ 19,443
$ (24,342)
$(1,583)
$
--
$ (6,482)
Balance at December 31, 2007
$ 5,938
$(21,330)
$5,594
$405
$ (9,393)
