FORM 10-K
85
MDU RESOURCES G ROUP, INC.
Other amortizable intangible assets at December 31, 2007 and 2006, were as follows:
2007
2006
(In thousands)
Customer relationships
$21,834
$13,030
Accumulated amortization
(4,444)
(1,890)
17,390
11,140
Noncompete agreements
10,655
12,886
Accumulated amortization
(3,654)
(8,540)
7,001
4,346
Acquired contracts
2,539
8,307
Accumulated amortization
(1,615)
(4,646)
924
3,661
Other
3,404
5,062
Accumulated amortization
(927)
(1,407)
2,477
3,655
Total
$27,792
$22,802
Amortization expense for intangible assets for the years ended December 31, 2007, 2006 and 2005, was $4.4 million, $4.3 million and $3.5
million, respectively. Estimated amortization expense for intangible assets is $5.7 million in 2008, $4.4 million in 2009, $3.4 million in 2010,
$2.9 million in 2011, $2.7 million in 2012 and $8.7 million thereafter.
NOTE 6 -- REGUL ATORY ASSETS AND LIABILITIES
The following table summarizes the individual components of unamortized regulatory assets and liabilities as of December 31:
2007
2006
(In thousands)
Regulatory assets:
Deferred income taxes
$ 43,866
$ 35,978
Pension and postretirement benefits
21,613
19,075
Natural gas supply derivatives
16,324
--
Long-term debt refinancing costs
10,605
11,232
Plant costs
4,930
13,254
Other
15,812
7,230
Total regulatory assets
113,150
86,769
Regulatory liabilities:
Plant removal and decommissioning costs
89,991
85,087
Taxes refundable to customers
22,580
14,229
Deferred income taxes
17,630
18,019
Natural gas costs refundable through rate adjustments
11,568
7,516
Natural gas supply derivatives
5,631
--
Other
8,250
4,179
Total regulatory liabilities
155,650
129,030
Net regulatory position
$(42,500)
$(42,261)
As of December 31, 2007, a large portion of the Company's regulatory assets, other than certain deferred income taxes, was being reflected
in rates charged to customers and is being recovered over the next 1 to 15 years. A portion of the Company's regulatory assets are not
earning a return; however, these regulatory assets are expected to be recovered from customers in future rates.
If, for any reason, the Company's regulated businesses cease to meet the criteria for application of SFAS No. 71 for all or part of their
operations, the regulatory assets and liabilities relating to those portions ceasing to meet such criteria would be removed from the balance
sheet and included in the statement of income as an extraordinary item in the period in which the discontinuance of SFAS No. 71 occurs.
NOTE 7 -- DERIVATIVE INSTRUMENTS
Derivative instruments, including certain derivative instruments embedded in other contracts, are required to be recorded on the balance
sheet as either an asset or liability measured at fair value. Changes in the derivative instrument's fair value are recognized currently in
earnings unless specific hedge accounting criteria are met. Accounting for qualifying hedges allows derivative gains and losses to offset the
related results on the hedged item in the income statement and requires that a company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting treatment.
