What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-23 compared with 2021-02-19 · 339 added, 441 removed, 1790 unchanged (30% of the section changed)

20 unchanged sentences

We have audited the accompanying consolidated balance sheets of MDU Resources Group, Inc.

and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and the financial statement schedules listed in the Index at Item 15 (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

42 unchanged sentences

The Company’s regulated utility businesses account for certain income and expense items under the provisions of regulatory accounting, which requires these businesses to defer as regulatory assets or liabilities certain items that would have otherwise been reflected as expense or income, respectively, based on the expected regulatory treatment in future rates.

The expected recovery or flowback of these deferred items generally is based on specific ratemaking decisions or precedent for each item.

Rates are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the regulated utility businesses.

Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment, and the timing and amount of assets to be recovered by rates.

The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital.

Decisions to be made by the Commissions in the future will impact the accounting for regulated operations.

The expected recovery, refund or future rate reduction of these deferred items generally is based on specific ratemaking decisions or precedent for each item.

Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures, such as property, plant, and equipment;

2 unchanged sentences

operation and maintenance expense;

and depreciation expense.

depreciation expense;

and income taxes.

Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment, and the timing and amount of assets to be recovered by rates.

The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital.

Decisions to be made by the Commissions in the future will impact the accounting for regulated operations.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about impacted account balances and disclosures and the degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements.

Management judgments include assessing the likelihood of (1) recovery in future rates of incurred costs and (2) refunds to customers.

Management judgments include assessing the likelihood of (1) recovery in future rates of incurred costs and (2) refunds or future rate reduction to customers.

Given management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments requires specialized knowledge of accounting for rate regulation due to its inherent complexities.

7 unchanged sentences

MDU Resources Group, Inc.

• We read relevant regulatory orders issued by the Commissions for the Company and other public utilities in the Company’s significant jurisdictions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances.

We evaluated the external information and compared to management’s recorded regulatory asset and liability balances for completeness.

• For regulatory matters in process, we inspected the Company’s filings with the Commissions and the filings with the Commissions by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

• We read relevant regulatory orders issued by the Commissions for the Company and other public utilities in the Company’s significant jurisdictions, procedural memorandums, filings made by the Company or interveners, and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances.

We evaluated the external information and compared to management’s recorded regulatory asset and liability balances for completeness, and for any evidence that might contradict management’s assertions.

• We obtained an analysis from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery, or a future reduction in rates.

• We inspected minutes of the board of directors to identify any evidence that may contradict management’s assertions regarding probability of recovery or refunds.

We also inquired of management regarding current year rate filings and new regulatory assets or liabilities.

/s/ Deloitte & Touche LLP

9 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2020, of the Company and our report dated February 19, 2021, expressed an unqualified opinion on those consolidated financial statements and financial statement schedules.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated February 23, 2022, expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

36 unchanged sentences

Operating income 534,219 544,925 481,220

Other income (expense) 26,711 15,812 ( 238 )

Other income 26,416 26,711 15,812

Interest expense 93,984 96,519 98,587

28 unchanged sentences

Postretirement liability adjustment 6,746 ( 6,473 ) ( 4,665 )

Foreign currency translation adjustment:

Foreign currency translation adjustment recognized during the period, net of tax of $ 0 , $ 0 and $( 14 ) in 2020, 2019 and 2018, respectively

Reclassification adjustment for foreign currency translation adjustment included in net income, net of tax of $ 0 , $ 0 and $ 75 in 2020, 2019 and 2018, respectively

Foreign currency translation adjustment — — 188

Net unrealized gain (loss) on available-for-sale investments:

37 unchanged sentences

Accrued compensation 81,904 90,629

Regulatory liabilities due within one year 31,450 42,935

Operating lease liabilities due within one year 35,368 33,655

Regulatory liabilities due within one year 16,303 31,450

Other accrued liabilities 207,078 198,514

3 unchanged sentences

Deferred income taxes 591,962 516,098

Regulatory liabilities 428,075 447,370

Asset retirement obligations 458,061 440,356

Regulatory liabilities 428,790 428,075

Operating lease liabilities 89,253 86,868

21 unchanged sentences

Shares Amount Shares Amount Total

(in thousands, except shares)

At December 31, 2018 196,564,907 $ 196,565 $ 1,248,576 $ 1,163,602 $ ( 38,342 ) ( 538,921 ) $ ( 3,626 ) $ 2,566,775

Cumulative effect of adoption of ASC 606 — — — ( 970 ) — — — ( 970 )

Adjusted Balance at January 1,2018 195,843.297 195,843 1,233,412 1,039,778 ( 37,334 ) ( 538.921 ) ( 3,626 ) 2,428,073

— — — 272,318 — — — 272,318

Other comprehensive income — — — — 6,951 — — 6,951

Reclassification of certain prior period tax effects from accumulated other comprehensive loss — — — 7,959 ( 7,959 ) — — —

Net income — — — 335,453 — — — 335,453

Other comprehensive loss — — — — ( 3,760 ) — — ( 3,760 )

Dividends declared on common stock — — — ( 162,408 ) — — — ( 162,408 )

— — — ( 156,453 ) — — — ( 156,453 )

Stock-based compensation

— — 5,060 — — — — 5,060

Repurchase of common stock

— — — — — ( 182,424 ) ( 5,020 ) ( 5,020 )

Employee stock-based compensation — — 7,353 — — — — 7,353

Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings 246,214 246 ( 3,261 ) — — — — ( 3,015 )

4 unchanged sentences

Dividends declared on common stock — — — ( 168,489 ) — — — ( 168,489 )

Stock-based compensation — — 7,353 — — — — 7,353

Employee stock-based compensation — — 13,096 — — — — 13,096

Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings 26,406 26 ( 388 ) — — — — ( 362 )

1 unchanged sentence

At December 31, 2020 201,061,198 201,061 1,371,385 1,558,363 ( 48,078 ) ( 538,921 ) ( 3,626 ) 3,079,105

— — — 390,205 — — — 390,205

Other comprehensive loss

— — — — ( 5,976 ) — — ( 5,976 )

Net income — — — 378,131 — — — 378,131

Other comprehensive income — — — — 7,074 — — 7,074

Dividends declared on common stock — — — ( 174,084 ) — — — ( 174,084 )

— — — ( 168,489 ) — — — ( 168,489 )

Stock-based compensation

— — 13,096 — — — — 13,096

Employee stock-based compensation — — 14,709 — — — — 14,709

Repurchase of common stock — — — — — ( 392,294 ) ( 6,701 ) ( 6,701 )

Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings — — ( 10,828 ) — — 392,294 6,701 ( 4,127 )

Issuance of common stock 2,828,463 2,828 85,939 — — — — 88,767

112,002 112 3,273 — — — — 3,385

At December 31, 2021 203,889,661 $ 203,889 $ 1,461,205 $ 1,762,410 $ ( 41,004 ) ( 538,921 ) $ ( 3,626 ) $ 3,382,874

11 unchanged sentences

Deferred income taxes 60,250 ( 1,801 ) 63,415

Provision for credit losses 1,085 10,576 7,864

Amortization of debt issuance costs 1,333 2,162 1,330

Employee stock-based compensation costs 14,709 13,096 7,353

Pension & postretirement benefit plan net periodic benefit cost (credit) ( 4,900 ) ( 3,001 ) 703

Unrealized gains on investments ( 7,728 ) ( 14,563 ) ( 11,445 )

Gains on sales of assets ( 13,056 ) ( 15,350 ) ( 15,479 )

Changes in current assets and liabilities, net of acquisitions:

4 unchanged sentences

Other current liabilities ( 17,650 ) 35,591 51,278

Pension & postretirement benefit plan contributions ( 476 ) ( 434 ) ( 25,613 )

Other noncurrent changes ( 55,367 ) 30,291 ( 17,662 )

7 unchanged sentences

Investments ( 3,973 ) ( 1,814 ) ( 2,011 )

Net cash used in continuing operations ( 630,243 ) ( 603,861 ) ( 712,143 )

Net cash provided by discontinued operations — — 1,236

Net cash used in investing activities ( 885,878 ) ( 630,243 ) ( 603,861 )

4 unchanged sentences

Repayment of long-term debt ( 24,979 ) ( 148,634 ) ( 468,917 )

Debt issuance costs ( 918 ) ( 477 ) ( 4,537 )

Proceeds from issuance of common stock 88,767 3,385 106,848

Payments of stock issuance costs — — ( 10 )

Dividends paid ( 171,354 ) ( 166,405 ) ( 160,256 )

2 unchanged sentences

Net cash provided by (used in) financing activities 384,715 ( 145,043 ) 74,092

Effect of exchange rate changes on cash and cash equivalents — — ( 1 )

Increase (decrease) in cash and cash equivalents ( 5,386 ) ( 6,912 ) 12,511

11 unchanged sentences

For further descriptions of the Company's businesses, see Note 17.

On January 2, 2019, the Company announced the completion of the Holding Company Reorganization, which resulted in Montana-Dakota becoming a subsidiary of the Company.

The purpose of the reorganization was to make the public utility division into a subsidiary of the holding company, just as the other operating companies are wholly owned subsidiaries.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, and the President of the United States declared the COVID-19 outbreak as a national emergency.

Governmental restrictions and guidelines implemented to control the spread of COVID-19 reduced commercial and interpersonal activity throughout the Company's areas of operation.

Most of the Company's products and services are considered essential and accordingly operations have been generally allowed to continue.

The Company has experienced some inefficiency impacts, including operation suspensions and interruptions at some locations to carry out preventive measures or in response to instances of positive tests or quarantines.

The Company has assessed the impacts of the COVID-19 pandemic on its results of operations for the twelve months ended December 31, 2020, and determined there were no material adverse impacts.

In the first quarter of 2020, the Company recorded an out-of-period adjustment to correct the recognition of revenue on a construction contract, which was the result of an overstatement of operating revenue and receivables of $ 7.7 million and an understatement of operating expense and accounts payable of $ 1.2 million in the year ended December 31, 2019.

This adjustment resulted in an after-tax reduction to net income of $ 6.7 million in the first quarter of 2020.

The Company evaluated the impact of the out-of-period adjustment and concluded it was not material to any previously issued interim and annual consolidated financial statements and the adjustment was not material to the three months ended March 31, 2020, or the twelve months ended December 31, 2020.

In the fourth quarter of 2020, the Company recorded an out-of-period adjustment to correct the recognition of net periodic benefit cost and other comprehensive income associated with the Company's benefit plans, which was the result of the previous overstatement of benefit plan expenses of $ 6.5 million, understatement of accumulated other comprehensive loss of $ 2.7 million and overstatement of regulatory liabilities of $ 3.8 million from 2006 through 2020.

This adjustment resulted in an after-tax increase to net income of $ 4.4 million in the fourth quarter of 2020.

The Company evaluated the impact of the out-of-period adjustment, individually and in the aggregate with the previously mentioned out-of-period adjustment, and concluded it was not material to any previously issued interim and annual consolidated financial statements and the adjustment was not material to the three and twelve months ended December 31, 2020.

Effective January 1, 2020, the Company adopted the requirements of the ASU on the measurement of credit losses on certain financial instruments following a modified retrospective approach, as further discussed in Note 2.

As such, results for reporting periods beginning on January 1, 2020, are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with historic accounting.

The Company's adoption of this guidance did not have a material impact on its financial reporting.

Beginning in March 2020, governmental restrictions and guidelines implemented to control the spread of COVID-19 reduced commercial and interpersonal activity throughout the Company's areas of operation.

Most of the Company's products and services are considered essential to America and its communities and, as a result, operations have generally continued through the COVID-19 pandemic and reopening of the country's economy.

The Company has assessed the impacts of the COVID-19 pandemic on its results of operations for the years ended December 31, 2021 and 2020, and determined there were no material adverse impacts.

The assets and liabilities of the Company's discontinued operations have been classified as held for sale and are included in prepayments and other current assets, noncurrent assets - other and other accrued liabilities on the Consolidated Balance Sheets and are not material to the financial statements for any period presented.

1 unchanged sentence

Unless otherwise indicated, the amounts presented in the accompanying notes to the consolidated financial statements relate to the Company's continuing operations.

Management has also evaluated the impact of events occurring after December 31, 2020, up to the date of issuance of these consolidated financial statements.

In 2021, the Company made changes to the presentation of the Consolidated Statements of Cash Flows to provide further clarity on the sources and uses of net cash provided by operating activities and net cash provided by (used in) financing activities.

Certain prior year amounts have been reclassified to conform to the current year presentation.

These reclassifications did not impact total net cash provided by operating activities or net cash provided by (used in) financing activities for the years ended December 31, 2020 and 2019.

Management has also evaluated the impact of events occurring after December 31, 2021, up to the date of issuance of these consolidated financial statements on February 23, 2022, that would require recognition or disclosure in the financial statements.

Principles of consolidation

4 unchanged sentences

See Note 19 for additional information.

MDU Resources Group, Inc.

Use of estimates

18 unchanged sentences

Consequently, operating results can be affected by revisions to prior accounting estimates.

MDU Resources Group, Inc.

Note 2 - Significant Accounting Policies

New accounting standards

The following table provides a brief description of the accounting pronouncements applicable to the Company and the potential impact on its financial statements and or disclosures:

Standard Description Effective date Impact on financial statements/disclosures

Recently adopted accounting standards

ASU 2016-13 - Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance on the measurement of credit losses on certain financial instruments.

The guidance introduced a new impairment model known as the current expected credit loss model that replaced the incurred loss impairment methodology previously included under GAAP.

This guidance required entities to present certain investments in debt securities, trade accounts receivable and other financial assets at their net carrying value of the amount expected to be collected on the financial statements.

The Company adopted the guidance on January 1, 2020, using a modified retrospective approach.

The Company formed an implementation team to review and assess existing financial assets to identify and evaluate the financial assets subject to the new current expected credit loss model.

The Company assessed the impact of the guidance on its processes and internal controls and has identified and updated existing internal controls and processes to ensure compliance with the new guidance;

such modifications were deemed insignificant.

During the assessment phase, the Company identified the complete portfolio of assets subject to the current expected credit loss model.

The Company determined the guidance did not have a material impact on its results of operations, financial position, cash flows or disclosures and did not record a material cumulative effect adjustment upon adoption.

See Receivables and allowance for expected credit losses within this note for additional information on the Company's expected credit losses.

ASU 2018-13 - Changes to the Disclosure Requirements for Fair Value Measurement In August 2018, the FASB issued guidance on modifying the disclosure requirements on fair value measurements as part of the disclosure framework project.

The guidance modified, among other things, the disclosures required for Level 3 fair value measurements, including the range and weighted average of significant unobservable inputs.

The guidance removed, among other things, the disclosure requirement to disclose transfers between Levels 1 and 2.

The Company adopted the guidance on January 1, 2020, and determined it did not have a material impact on its disclosures.

Recently issued accounting standards not yet adopted

ASU 2018-14 - Changes to the Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued guidance on modifying the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans as part of the disclosure framework project.

2 unchanged sentences

The guidance removed, among other things, the disclosure requirement to disclose the amount of net periodic benefit costs to be amortized over the next fiscal year from accumulated other comprehensive income (loss) and the effects a one percentage point change in assumed health care cost trend rates will have on certain benefit components.

The guidance was effective for the Company on January 1, 2021, and must be applied on a retrospective basis.

The Company determined the new guidance will not materially impact its consolidated financial statement disclosures.

January 1, 2021 The Company determined the guidance did not materially impact its consolidated financial statement disclosures.

ASU 2019-12 - Simplifying the Accounting for Income Taxes In December 2019, the FASB issued guidance on simplifying the accounting for income taxes by removing certain exceptions in ASC 740 and providing simplification amendments.

The guidance removed exceptions on intraperiod tax allocations and reporting and provided simplification on accounting for franchise taxes, tax basis goodwill and tax law changes.

The Company adopted the guidance on January 1, 2021, and determined it did not have a material impact on its results of operations, financial position, cash flows and disclosures.

January 1, 2021 The Company determined the guidance did not materially impact its results of operations, financial position, cash flows or disclosures.

Recently issued accounting standards not yet adopted

ASU 2020-04 - Reference Rate Reform In March 2020, the FASB issued optional guidance to ease the facilitation of the effects of reference rate reform on financial reporting.

The guidance applies to certain contract modifications, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

LIBOR is expected to be retired with a full phase-out by the end of 2021 and replaced by new reference rates, which includes SOFR.

The guidance can be applied beginning in the interim period that includes March 12, 2020, and cannot be applied to contract modifications or hedging relationships entered into or evaluated after December 31, 2022.

The Company has updated its credit agreements to include language regarding the successor or alternate rate to LIBOR, and a review of other contracts and agreements is on-going.

Beginning January 1, 2022, LIBOR or other discontinued reference rates cannot be applied to new contracts.

New contracts will incorporate a new reference rate, which includes SOFR.

LIBOR or other discontinued reference rates cannot be applied to contract modifications or hedging relationships entered into or evaluated after December 31, 2022.

Existing contracts referencing LIBOR or other reference rates expected to be discontinued must identify a replacement rate by June 30, 2023.

Effective as of March 12, 2020 and will continue through December 31, 2022 The Company has updated its credit agreements to include language regarding the successor or alternate rate to LIBOR, and a review of other contracts and agreements is on-going.

The Company does not expect the guidance to have a material impact on its results of operations, financial position, cash flows or disclosures.

66 MDU Resources Group, Inc.

ASU 2021-10 - Government Assistance In November 2021, the FASB issued guidance on modifying the disclosure requirements to increase the transparency of government assistance including disclosure of the types of assistance, an entity's accounting for the assistance and the effect of the assistance on an entity's financial statements.

January 1, 2022 The Company is currently evaluating the impact the guidance will have on its disclosures for the year ended December 31, 2022.

Cash and cash equivalents

6 unchanged sentences

The electric and natural gas distribution segments generate revenue from the sales of electric and natural gas products and services, which includes retail and transportation services.

These segments establish a customer's retail or transportation service account based on the customer's application/contract for service, which indicates approval of a contract for service.

These segments establish a customer's retail or transportation service account based on the customer's application/

74 MDU Resources Group, Inc.

contract for service, which indicates approval of a contract for service.

The contract identifies an obligation to provide service in exchange for delivering or standing ready to deliver the identified commodity;

8 unchanged sentences

At this time, the segment has no material obligations for returns, refunds or other similar obligations.

The pipeline segment generates revenue from providing natural gas transportation, gathering and underground storage services, as well as other energy-related services to both third parties and internal customers, largely the natural gas distribution segment.

The pipeline segment establishes a contract with a customer based upon the customer’s request for firm or interruptible natural gas transportation, storage or gathering service(s).

The pipeline segment generates revenue from providing natural gas transportation and underground storage services, as well as other energy-related services to both third parties and internal customers, largely the natural gas distribution segment.

The pipeline segment establishes a contract with a customer based upon the customer’s request for firm or interruptible natural gas transportation or storage service(s).

The contract identifies an obligation for the segment to provide the requested service(s) in exchange for consideration from the customer over a specified term.

Depending on the type of service(s) requested and contracted, the service provided may include transporting, gathering or storing an identified quantity of natural gas and/or standing ready to deliver or store an identified quantity of natural gas.

Natural gas transportation, gathering and storage revenues are based on fixed rates, which may include reservation fees and/or per-unit commodity rates.

Depending on the type of service(s) requested and contracted, the service provided may include transporting or storing an identified quantity of natural gas and/or standing ready to deliver or store an identified quantity of natural gas.

Natural gas transportation and storage revenues are based on fixed rates, which may include reservation fees and/or per-unit commodity rates.

The services provided by the segment are generally treated as single performance obligations satisfied over time simultaneous to when the service is provided and revenue is recognized.

1 unchanged sentence

For contracts governed by the company’s tariff, amounts are billed on or before the ninth business day of the following month and the amount is due within 12 days of receipt of the invoice.

For gathering contracts not governed by the tariff, amounts are due within 20 days of invoice receipt.

For other contracts not governed by the tariff, payment terms are net 30 days.

23 unchanged sentences

There are no material obligations for returns, refunds or other similar obligations.

MDU Resources Group, Inc.

The construction services segment generates revenue from specialty contracting services which also includes the sale of construction equipment and other supplies.

7 unchanged sentences

Changes in circumstances could impact management's estimates made in determining the value of variable consideration recorded.

The Company updates its estimate of the transaction price each reporting period and the effect of variable consideration on the transaction price is recognized as an adjustment to revenue on a cumulative catch-up basis.

The Company updates its

MDU Resources Group, Inc.

estimate of the transaction price each reporting period and the effect of variable consideration on the transaction price is recognized as an adjustment to revenue on a cumulative catch-up basis.

Revenue is recognized over time using the input method based on the measurement of progress on a project.

18 unchanged sentences

Receivables and allowance for expected credit losses

Receivable consists primarily of trade receivables from the sale of goods and services, which are recorded at the invoiced amount, and contract assets, net of expected credit losses.

Receivables consist primarily of trade receivables from the sale of goods and services, which are recorded at the invoiced amount, and contract assets, net of expected credit losses.

For more information on contract assets, see Note 3.

6 unchanged sentences

The Company conducted additional analysis of its receivables and allowance for expected credit losses due to the impacts of COVID-19.

As more customer balances enter arrears, further analysis supported increasing the uncollectible factors used in determining the expected credit losses of certain segments during 2020.

As more customer balances entered arrears, further analysis supported increasing the uncollectible factors used in determining the expected credit losses of certain segments during 2020.

During 2021, certain segments continued to experience balances in arrears higher than historical levels, which supported the continued use of increased uncollectible factors, while other segments experienced balances in arrears returning to historical levels alleviating the need for certain associated credit loss estimates.

Management has reviewed the balance reserved through the allowance for expected credit losses and believes it is reasonable.

8 unchanged sentences

At January 1, 2020

$ 328 $ 1,056 $ — $ 5,357 $ 1,756 $ 8,497

Current expected credit loss provision* 1,517 3,187 2 1,447 4,832 10,985

2 unchanged sentences

At December 31, 2020 899 2,571 2 6,164 5,722 15,358

The Company's allowance for doubtful accounts at December 31, 2019, was $ 8.5 million.

Current expected credit loss provision* 1,099 2,188 — 68 ( 2,250 ) 1,105

Less write-offs charged against the allowance 2,139 4,072 — 826 1,032 8,069

Credit loss recoveries collected 410 819 — — 93 1,322

At December 31, 2021 $ 269 $ 1,506 $ 2 $ 5,406 $ 2,533 $ 9,716

* Includes impacts from businesses acquired.

Receivables also consist of accrued unbilled revenue representing revenues recognized in excess of amounts billed.

21 unchanged sentences

Total $ 335,609 $ 291,167

The remainder of natural gas in storage, which largely represents the cost of gas required to maintain pressure levels for normal operating purposes, was included in noncurrent assets - other and was $ 47.5 million and $ 48.4 million at December 31, 2020 and 2019, respectively.

MDU Resources Group, Inc.

11 unchanged sentences

Generally, property, plant and equipment are depreciated on a straight-line basis over the average useful lives of the assets, except for depletable aggregate reserves, which are depleted based on the units-of-production method.

The Company collects removal costs for plant assets in regulated utility rates.

The Company collects removal costs for certain plant assets in regulated utility rates.

These amounts are recorded as regulatory liabilities on the Consolidated Balance Sheets.

33 unchanged sentences

The Company has not elected the fair value option for its mortgage-backed securities and U.S.

Treasury securities and, as a result, the unrealized gains and losses on these investments are recorded in accumulated other comprehensive income (loss).

Treasury securities and, as a result, the unrealized gains and losses on these investments are recorded in accumulated other comprehensive loss.

For more information, see Notes 8 and 18 .

Joint ventures

The Company accounts for unconsolidated joint ventures using either the equity method or proportionate consolidation.

The Company currently holds interests between 33 percent and 50 percent in joint ventures formed primarily for the purpose of pooling resources on construction contracts.

Proportionate consolidation is used for joint ventures that include unincorporated legal entities and activities of the joint venture which are construction-related.

For those joint ventures accounted for under proportionate consolidation, only the Company’s pro rata share of assets, liabilities, revenues and expenses are included in the Company’s balance sheet and results of operations.

For those joint ventures accounted for using proportionate consolidation, the Company recorded in its Consolidated Statements of Income $ 14.7 million and $ 69.7 million of revenue for the years ended December 31, 2021 and 2020, respectively, and $ 4.7 million and $ 20.6 million of operating income for the years ended December 31, 2021 and 2020, respectively.

At December 31, 2021 and 2020, the Company had receivables from these joint ventures of $ 1.2 million and $ 1.8 million, respectively.

For those joint ventures accounted for under the equity method, the Company's investment balances for the joint venture is included in Investments in the Consolidated Balance Sheets and the Company’s pro rata share of net income is included in Other income in the Consolidated Statements of Income.

The Company’s investments in equity method joint ventures at December 31, 2021 and 2020, were a net asset of $ 1.3 million and $ 425,000 , respectively.

In 2021 and 2020, the Company recognized income (loss) from equity method joint ventures of $ 892,000 and $( 32,000 ), respectively.

Derivative instruments

The Company enters into commodity price derivative contracts in order to minimize the price volatility associated with natural gas costs at its natural gas distribution segment.

These derivatives are not designated as hedging instruments and are recorded in the Consolidated Balance Sheets at fair value, as discussed in Note 8.

The Company enters into commodity price derivative contracts in order to minimize the price volatility associated with customer natural gas costs at its natural gas distribution segment.

These derivatives are not designated as hedging instruments and are recorded in the Consolidated Balance Sheets at fair value.

Changes in the fair value of these derivatives along with any contract settlements are recorded each period in regulatory assets or liabilities in accordance with regulatory accounting.

The Company does not enter into any derivatives for trading or other speculative purposes.

In 2017, the WUTC issued a requirement for gas providers to implement robust, risk-responsive hedging programs in order to minimize volatility in natural gas prices for natural gas utility customers and in 2019, the Company implemented policies and procedures that met these requirements.

During 2020 and 2019, the Company entered into commodity price derivative contracts securing the purchase of 1.4 million MMBtu and 535,000 MMBtu of natural gas, respectively.

During 2021 and 2020, the Company entered into commodity price derivative contracts securing the purchase of 450,000 MMBtu and 1.4 million MMBtu of natural gas, respectively.

Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term.

16 unchanged sentences

The Company uses the straight-line amortization method to recognize compensation expense related to restricted stock, which only has a service condition.

This method recognizes stock compensation expense on a straight-line basis over the requisite service period for the entire award.

This method recognizes stock compensation expense on a straight-line basis over the

MDU Resources Group, Inc.

requisite service period for the entire award.

The Company recognizes compensation expense related to performance awards that vest based on performance metrics and service conditions on a straight-line basis over the service period.

5 unchanged sentences

At the time actual forfeitures become more than estimated forfeitures, the Company records compensation expense using actual forfeitures .

MDU Resources Group, Inc.

Earnings per share

Basic earnings per share were computed by dividing net income by the weighted average number of shares of common stock outstanding during the year.

Diluted earnings per share were computed by dividing net income by the total of the weighted average number of shares of common stock outstanding during the year, plus the effect of nonvested performance share awards and restricted stock units.

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the year.

Diluted earnings per share is computed by dividing net income by the total of the weighted average number of shares of common stock outstanding during the year, plus the effect of nonvested performance share awards and restricted stock units.

Common stock outstanding includes issued shares less shares held in treasury.

Net income was the same for both the basic and diluted earnings per share calculations.

A reconciliation of the weighted average common shares outstanding used in the basic and diluted earnings per share calculation was as follows:

A reconciliation of the weighted average common shares outstanding used in the basic and diluted earnings per share calculations follows:

2021 2020 2019

9 unchanged sentences

The Company uses the deferral method of accounting for investment tax credits and amortizes the credits on regulated electric and natural gas distribution plant over various periods that conform to the ratemaking treatment prescribed by the applicable state public service commissions.

The Company records uncertain tax positions in accordance with accounting guidance on accounting for income taxes on the basis of a two-step process in which (1) the Company determines whether it is more-likely-than-not that the tax position will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of the tax benefit that is more than 50 percent percent likely to be realized upon ultimate settlement with the related tax authority.

The Company records uncertain tax positions in accordance with accounting guidance on accounting for income taxes on the basis of a two-step process in which (1) the Company determines whether it is more-likely-than-not that the tax position will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of the tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

Tax positions that do not meet the more-likely-than-not criteria are reflected as a tax liability.

7 unchanged sentences

The Company's evaluation of whether it qualifies as the primary beneficiary of a VIE involves significant judgments, estimates and assumptions and includes a qualitative analysis of the activities that most significantly impact the VIE's economic performance and whether the Company has the power to direct those activities, the design of the entity, the rights of the parties and the purpose of the arrangement.

80 MDU Resources Group, Inc.

Note 3 - Revenue from Contracts with Customers

4 unchanged sentences

As part of the adoption of ASC 606 - Revenue from Contracts with Customers , the Company elected the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is 12 months or less.

72 MDU Resources Group, Inc.

Disaggregation

11 unchanged sentences

Natural gas transportation — 48,408 114,001 — — — 162,409

Natural gas gathering — — 4,865 — — — 4,865

Natural gas storage — — 14,680 — — — 14,680

2 unchanged sentences

Intrasegment eliminations — — — ( 501,044 ) — — ( 501,044 )

Inside specialty contracting — — — — 1,397,124 — 1,397,124

Outside specialty contracting — — — — 649,486 — 649,486

Electrical & mechanical specialty contracting — — — — 1,324,419 — 1,324,419

Transmission & distribution specialty contracting — — — — 677,074 — 677,074

Other 42,902 10,567 13,667 — 557 13,714 81,407

15 unchanged sentences

Intrasegment eliminations — — — ( 550,815 ) — — ( 550,815 )

Inside specialty contracting — — — — 1,266,196 — 1,266,196

Outside specialty contracting — — — — 531,882 — 531,882

Electrical & mechanical specialty contracting — — — — 1,397,124 — 1,397,124

Transmission & distribution specialty contracting — — — — 649,486 — 649,486

Other 32,452 10,753 12,216 — 1,541 11,903 68,865

4 unchanged sentences

MDU Resources Group, Inc.

Year ended December 31, 2018

Electric Natural gas distribution Pipeline Construction materials and contracting Construction services Other Total

Year ended December 31, 2019 Electric Natural gas distribution Pipeline Construction materials and contracting Construction services Other Total

(In thousands)

9 unchanged sentences

Intrasegment eliminations — — — ( 525,749 ) — — ( 525,749 )

Inside specialty contracting — — — — 926,875 — 926,875

Outside specialty contracting — — — — 392,544 — 392,544

Electrical & mechanical specialty contracting — — — — 1,266,196 — 1,266,196

Transmission & distribution specialty contracting — — — — 531,882 — 531,882

Other 35,574 12,726 17,687 — 131 16,551 82,669

29 unchanged sentences

Contract liabilities - noncurrent ( 52 ) ( 19 ) ( 33 ) Noncurrent liabilities - other

Net contract assets (liabilities) $ ( 33,709 ) $ 10,203 $ ( 43,912 )

Net contract liabilities $ ( 54,310 ) $ ( 33,709 ) $ ( 20,601 )

The Company recognized $ 155.0 million and $ 138.2 million in revenue for the years ended December 31, 2021 and 2020, respectively, which was previously included in contract liabilities at December 31, 2020 and 2019, respectively.

The Company recognized a net increase in revenues of $ 58.8 million and $ 44.1 million for the years ended December 31, 2020 and 2019, respectively, from performance obligations satisfied in prior periods.

82 MDU Resources Group, Inc.

The Company recognized a net increase in revenues of $ 66.3 million and $ 58.8 million for the years ended December 31, 2021 and 2020, respectively, from performance obligations satisfied in prior periods.

Remaining performance obligations

6 unchanged sentences

The Company has applied the practical expedient that does not require additional disclosures for contracts with an original duration of less than 12 months to certain firm transportation and non-regulated contracts.

The Company's firm transportation and firm storage contracts included in the remaining performance obligations have weighted average remaining durations of approximately five and one years, respectively.

The Company's firm transportation and firm storage contracts included in the remaining performance obligations have weighted average remaining durations of less than five and one years, respectively.

At December 31, 2021, the Company's remaining performance obligations were $ 2.5 billion.

9 unchanged sentences

The amounts included in the Consolidated Balance Sheets for these adjustments are considered provisional until final settlement has occurred.

The following acquisitions were made during 2020 and 2019 at the construction materials and contracting segment:

• In December 2020, the Company acquired the assets of McMurry Ready-Mix Co., an aggregates and concrete supplier in Wyoming.

• In February 2020, the Company acquired the assets of Oldcastle Infrastructure Spokane, a prestressed-concrete business in Washington.

• In December 2019, the Company acquired the assets Roadrunner Ready Mix, Inc., a provider of ready-mixed concrete in Idaho.

• In March 2019, the Company acquired Viesko Redi-Mix, Inc., a provider of ready-mixed concrete in Oregon.

The following acquisitions were made during 2020 and 2019 at the construction services segment:

• In February 2020, the Company acquired PerLectric, Inc., an electrical construction company in Virginia.

• In September 2019, the Company acquired the assets of Pride Electric, Inc., an electrical construction company in Washington.

The total purchase price for acquisitions that occurred in 2020 was $ 110.2 million, subject to certain adjustments, with cash acquired totaling $ 1.7 million.

The purchase price includes consideration paid of $ 106.0 million and $ 2.5 million of indemnity holdback liabilities.

In 2021 and 2020, the construction materials and contracting segment's acquisitions included:

• Baker Rock Resources and Oregon Mainline Paving, two premier construction materials companies located around the Portland, Oregon metro area, acquired in November 2021.

At December 31, 2021, the purchase price allocation was preliminary and will be finalized within 12 months of the acquisition date.

Hood Rock, a construction aggregates business in Oregon, acquired in April 2021.

At December 31, 2021, the purchase price allocation was preliminary and will be finalized within 12 months of the acquisition date.

• The assets of McMurry Ready-Mix Co., an aggregates and concrete supplier in Wyoming, acquired in December 2020.

In the third quarter of 2021, the Company finalized the provisional accounting and recorded an immaterial measurement period adjustment.

• The assets of Oldcastle Infrastructure Spokane, a prestressed-concrete business in Washington, acquired in February 2020.

As of December 31, 2020, the purchase price adjustments had been settled with no material adjustments to the provisional accounting.

In February 2020, the construction services segment acquired PerLectric, Inc., an electrical construction company in Virginia.

As of March 31, 2021, the purchase price adjustments had been settled with no material adjustments to the provisional accounting.

The total purchase price for acquisitions that occurred in 2021 was $ 236.1 million, subject to certain adjustments, with cash acquired totaling $ 900,000 .

The purchase price includes consideration paid of $ 235.2 million.

The amounts allocated to the aggregated assets acquired and liabilities assumed during 2021 were as follows:

4 unchanged sentences

$ 8.7 million to current liabilities;

$ 300,000 to noncurrent liabilities - other and $ 1.4 million to asset retirement obligations.

At December 31, 2020, the purchase price adjustments for Oldcastle Infrastructure Spokane had been settled and no material adjustments were made to the provisional accounting.

Purchase price allocations for PerLectric, Inc.

and McMurry Ready-Mix Co.

are preliminary and will be finalized within 12 months of the respective acquisition dates.

$ 2.5 million to noncurrent liabilities - other and $ 3.2 million to deferred tax liabilities.

The Company issued debt to finance these acquisitions.

In 2019, the gross aggregate consideration for acquisitions was $ 56.8 million, subject to certain adjustments, and includes $ 1.2 million of debt assumed.

The total purchase price for acquisitions that occurred in 2020 was $ 110.2 million, subject to certain adjustments, with cash acquired totaling $ 1.7 million.

The purchase price includes consideration paid of $ 106.0 million and $ 2.5 million of indemnity holdback liabilities.

The amounts allocated to the aggregated assets acquired and liabilities assumed during 2020 were as follows:

3 unchanged sentences

$ 19.0 million to other intangible assets;

$ 500,000 to noncurrent assets - other;

$ 5.9 million to current liabilities and $ 100,000 to noncurrent liabilities - other.

At December 31, 2020, the purchase price adjustments for all 2019 acquisitions had been settled and no material adjustments were made to the provisional accounting.

The Company issued debt and equity securities to finance these acquisitions.

During 2020, measurement period adjustments were made to previously reported provisional amounts, which increased goodwill by $ 391,000 .

$ 22.6 million to current liabilities;

$ 300,000 to noncurrent liabilities - other and $ 1.4 million to asset retirement obligations.

The $ 2.5 million indemnity holdback liability related to 2020 acquisitions was paid in 2021.

The Company issued debt to finance these acquisitions.

Costs incurred for acquisitions are included in operation and maintenance expense on the Consolidated Statements of Income and were not material for the years ended December 31, 2021, 2020 and 2019.

18 unchanged sentences

Transmission 673,344 665,567 46

Gathering — 35,661 —

Storage 57,670 52,632 53

2 unchanged sentences

Non-regulated:

Gathering — 31,148 —

Construction in progress 18 4 —

23 unchanged sentences

Natural gas costs recoverable through rate adjustments Up to 1 year $ 86,371 $ 42,481

Cost recovery mechanisms Up to 1 year 10,645 6,288

Decoupling Up to 1 year 9,131 703

Conservation programs Up to 1 year 8,225 7,117

Cost recovery mechanisms Up to 1 year 4,536 10,645

Other Up to 1 year 10,428 7,581

3 unchanged sentences

Plant to be retired - 50,070 65,919

Manufactured gas plant sites remediation - 26,429 15,126

Natural gas costs recoverable through rate adjustments Up to 2 years 21,539 46,381

Cost recovery mechanisms Up to 10 years 44,870 16,245

Manufactured gas plant sites remediation - 26,053 26,429

Taxes recoverable from customers Over plant lives 12,339 10,785

Natural gas costs recoverable through rate adjustments Up to 2 years 5,186 21,539

Long-term debt refinancing costs Up to 39 years 3,794 4,426

4 unchanged sentences

Natural gas costs refundable through rate adjustments Up to 1 year $ 6,700 $ 18,565

Electric fuel and purchased power deferral Up to 1 year 3,667 5,824

Taxes refundable to customers Up to 1 year 3,841 3,557

Electric fuel and purchased power deferral Up to 1 year — 3,667

Other Up to 1 year 5,762 5,661

10 unchanged sentences

As of December 31, 2021 and 2020, approximately $ 296.6 million and $ 332.5 million, respectively, of regulatory assets were not earning a rate of return but are expected to be recovered from customers in future rates.

These assets are largely comprised of the unfunded portion of pension and postretirement benefits, asset retirement obligations, accelerated depreciation on plant to be retired and the estimated future cost of manufactured gas plant site remediation.

These assets are largely comprised of the unfunded portion of pension and postretirement benefits, asset retirement obligations, accelerated depreciation on plant retirement and the estimated future cost of manufactured gas plant site remediation.

In February 2021, a prolonged period of unseasonably cold temperatures in the central United States significantly increased the demand for electric and natural gas services and contributed to increased market prices.

Overall, Montana-Dakota and Great Plains incurred approximately $ 44.0 million in increased natural gas costs in order to maintain services for its customers.

These extraordinary natural gas costs were recorded as regulatory assets as they are expected to be recovered from customers.

Montana-Dakota and Great Plains have received approval for the recovery of purchased gas adjustments related to the cold-weather event in all jurisdictions impacted, including out-of-cycle purchased gas adjustment requests in most jurisdictions.

For a discussion of the Company's most recent cases by jurisdiction, see Note 20.

MDU Resources Group, Inc.

In 2019, the Company experienced increased natural gas costs in Washington from the rupture of the Enbridge pipeline in Canada in late 2018.

As a result, the Company requested, and the WUTC approved, recovery of the balance of natural gas costs recoverable related to this period of time over three years rather than its normal one-year recovery period.

In February 2019, the Company announced that it intends to retire one aging coal-fired electric generating unit in March 2021 and two units in early 2022.

The Company has accelerated the depreciation related to these facilities in property, plant and equipment and has recorded the difference between the accelerated depreciation, in accordance with GAAP, and the depreciation approved for rate-making purposes as regulatory assets.

The Company expects to recover the regulatory assets related to the plants to be retired in future rates.

MDU Resources Group, Inc.

If, for any reason, the Company's regulated businesses cease to meet the criteria for application of regulatory accounting 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 or accumulated other comprehensive income (loss) in the period in which the discontinuance of regulatory accounting occurs.

In February 2019, the Company announced the retirement of three aging coal-fired electric generating units.

The Company accelerated the depreciation related to these facilities in property, plant and equipment and recorded the difference between the accelerated depreciation, in accordance with GAAP, and the depreciation approved for rate-making purposes as regulatory assets.

The first unit ceased operations on March 31, 2021, and the Company subsequently began amortizing plant retirement and closure costs related to this facility.

During 2021, the Company received approval from the NDPSC and the SDPUC to offset the savings associated with the cessation of operations of this unit with the amortization of the deferred regulatory assets and moved the costs being recovered for this facility from plant retirement to cost recovery mechanisms in the previous table.

The two remaining units are being retired during the first quarter of 2022.

The Company expects to recover the regulatory assets related to the plant retirements in future rates.

If, for any reason, the Company's regulated businesses cease to meet the criteria for application of regulatory accounting 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 or accumulated other comprehensive loss in the period in which the discontinuance of regulatory accounting occurs.

Note 7 - Goodwill and Other Intangible Assets

28 unchanged sentences

For more information related to these business combinations, see Note 4.

86 MDU Resources Group, Inc.

Amortization expense for amortizable intangible assets for the years ended December 31, 2021, 2020 and 2019, was $ 5.1 million, $ 9.0 million and $ 2.4 million, respectively.

3 unchanged sentences

Amortization expense $ 4,928 $ 4,578 $ 4,308 $ 2,314 $ 1,693 $ 4,757

78 MDU Resources Group, Inc.

Note 8 - Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.

The fair value ASC establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs.

The estimated fair values of the Company's assets and liabilities measured on a recurring basis are determined using the market approach.

The Company measures its investments in certain fixed-income and equity securities at fair value with changes in fair value recognized in income.

The Company anticipates using these investments, which consist of an insurance contract, to satisfy its obligations under its unfunded, nonqualified defined benefit plans for executive officers and certain key management employees, and invests in these fixed-income and equity securities for the purpose of earning investment returns and capital appreciation.

The Company anticipates using these investments, which consist of insurance contracts, to satisfy its obligations under its unfunded, nonqualified defined benefit plans for executive officers and certain key management employees, and invests in these fixed-income and equity securities for the purpose of earning investment returns and capital appreciation.

These investments, which totaled $ 109.6 million and $ 100.1 million at December 31, 2021 and 2020, respectively, are classified as investments on the Consolidated Balance Sheets.

The net unrealized gains on these investments for the years ended December 31, 2020 and 2019, were $ 13.1 million and $ 13.2 million, respectively.

The net unrealized loss on these investments for the year ended December 31, 2018, was $ 3.6 million.

The net unrealized gains on these investments for the years ended December 31, 2021, 2020 and 2019, were $ 7.2 million, $ 13.1 million and $ 13.2 million, respectively.

The change in fair value, which is considered part of the cost of the plan, is classified in other income on the Consolidated Statements of Income.

2 unchanged sentences

These available-for-sale securities are recorded at fair value and are classified as investments on the Consolidated Balance Sheets.

Unrealized gains or losses are recorded in accumulated other comprehensive income (loss).

Unrealized gains or losses are recorded in accumulated other comprehensive loss.

Details of available-for-sale securities were as follows:

11 unchanged sentences

Total $ 11,185 $ 156 $ 14 $ 11,327

The fair value ASC establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs.

The estimated fair values of the Company's assets and liabilities measured on a recurring basis are determined using the market approach.

The Company's assets measured at fair value on a recurring basis were as follows:

38 unchanged sentences

The Company reviews the carrying value of its long-lived assets, excluding goodwill, whenever events or changes in circumstances indicate that such carrying amounts may not be recoverable.

In the second quarter of 2019, the Company reviewed a non-utility investment at its electric and natural gas distribution segments for impairment.

This was a cost-method investment and was written down to zero using the income approach to determine its fair value, requiring the Company to record a write-down of $ 2.0 million, before tax.

The fair value of this investment was categorized as Level 3 in the fair value hierarchy.

The reduction is reflected in investments on the Consolidated Balance Sheet, as well as within other income on the Consolidated Statement of Income.

The estimated fair value of the Company's Level 2 commodity derivative instruments is based on futures prices, volatility and time to maturity, among other things.

Counterparty statements are utilized to determine the value of the commodity derivative instruments and are reviewed and corroborated using various methodologies and significant observable inputs.

The Company's and the counterparties' nonperformance risk is also evaluated.

The Company performed a fair value assessment of the assets acquired and liabilities assumed in the business combinations that occurred during 2021 and 2020.

14 unchanged sentences

Company Facility Facility

Limit Amount Outstanding at December 31, 2020 Amount Outstanding at December 31,

2019 Letters of

Credit at December 31, 2020 Expiration

Limit Amount Outstanding at December 31, 2021

Amount Outstanding at December 31, 2020

Credit at December 31, 2021

(In millions)

20 unchanged sentences

Short-term debt

Montana-Dakota On April 8, 2020, Montana-Dakota entered into a $ 75.0 million term loan agreement with a LIBOR-based variable interest rate and a maturity date of April 7, 2021.

At December 31, 2020, Montana-Dakota had $ 50.0 million outstanding under the agreement.

Montana-Dakota On March 8, 2021, Montana-Dakota entered into a $ 50.0 million term loan agreement with a LIBOR-based variable interest rate and a maturity date of March 7, 2022.

At December 31, 2021, Montana-Dakota had no amount outstanding under the agreement.

The agreement contains customary covenants and provisions, including a covenant of Montana-Dakota not to permit, at any time, the ratio of total debt to total capitalization to be greater than 65 percent.

4 unchanged sentences

(In thousands)

Senior Notes due on dates ranging from October 22, 2022 to October 30, 2060 4.40 % $ 1,950,000 $ 1,850,000

Senior Notes due on dates ranging from October 22, 2022 to September 15, 2061

4.32 % $ 2,125,000 $ 1,950,000

Commercial paper supported by revolving credit agreements

3 unchanged sentences

Medium-Term Notes due on dates ranging from September 15, 2027 to March 16, 2029

7.32 % 35,000 35,000

Term Loan Agreement due on September 3, 2032

2.00 % 7,700 8,400

Other notes due on dates ranging from July 15, 2021 to November 30, 2038

Other notes due on dates ranging from January 2, 2022 to January 1, 2061

1.03 % 2,564 4,034

4 unchanged sentences

Net long-term debt $ 2,593,847 $ 2,211,575

Montana-Dakota On January 1, 2019, the Company's revolving credit agreement and commercial paper program became Montana-Dakota's revolving credit agreement and commercial paper program as a result of the Holding Company Reorganization.

The outstanding balance of the revolving credit agreement was also transferred to Montana-Dakota.

All of the related terms and covenants of the credit agreements remained the same.

Montana-Dakota's revolving credit agreement supports its commercial paper program.

Montana-Dakota Montana-Dakota's revolving credit agreement supports its commercial paper program.

Commercial paper borrowings under this agreement are classified as long-term debt as they are intended to be refinanced on a long-term basis through continued commercial paper borrowings.

The credit agreement contains customary covenants and provisions, including covenants of Montana-Dakota not to permit, as of the end of any fiscal quarter,

MDU Resources Group, Inc.

the ratio of funded debt to total capitalization (determined on a consolidated basis) to be greater than 65 percent.

The credit agreement contains customary covenants and provisions, including covenants of Montana-Dakota not to permit, as of the end of any fiscal quarter, the ratio of funded debt to total capitalization (determined on a consolidated basis) to be greater than 65 percent.

Other covenants include limitations on the sale of certain assets and on the making of certain loans and investments.

MDU Resources Group, Inc.

On September 15, 2021, Montana-Dakota entered into a $ 125.0 million note purchase agreement with maturity dates ranging from September 15, 2051 to September 15, 2061, at a weighted average interest rate of 3.23 percent.

On September 15, 2021 and December 15, 2021, Montana-Dakota issued $ 75.0 million and $ 50.0 million, respectively, in senior notes under the note purchase agreement.

Montana-Dakota's ratio of total debt to total capitalization at December 31, 2021, was 51 percent.

2 unchanged sentences

Other covenants include restrictions on the sale of certain assets, limitations on indebtedness and the making of certain investments.

On June 15, 2020, Cascade issued $ 50.0 million of senior notes under a note purchase agreement with maturity dates ranging from June 15, 2050 to June 15, 2060, at a weighted average interest rate of 3.66 percent.

The agreement contains customary covenants and provisions, including a covenant of Cascade not to permit, at any time, the ratio of total debt to total capitalization to be greater than 65 percent.

On October 30, 2020, Cascade issued $ 25.0 million of senior notes under a note purchase agreement with a maturity date of October 30, 2060, at an interest rate of 3.34 percent.

The agreement contains customary covenants and provisions, including a covenant of Cascade not to permit, at any time, the ratio of total debt to total capitalization to be greater than 65 percent.

Cascade's ratio of total debt to total capitalization at December 31, 2021, was 51 percent.

7 unchanged sentences

Other covenants include restricted payments, restrictions on the sale of certain assets, limitations on subsidiary indebtedness, minimum consolidated net worth, limitations on priority debt and the making of certain loans and investments.

Centennial's ratio of total debt to total capitalization at December 31, 2020, was 31 percent.

Centennial's ratio of total debt to total capitalization, as defined by its debt covenants, at December 31, 2021, was 43 percent.

Certain of Centennial's financing agreements contain cross-default provisions.

These provisions state that if Centennial or any subsidiary of Centennial fails to make any payment with respect to any indebtedness or contingent obligation, in excess of a specified amount, under any agreement that causes such indebtedness to be due prior to its stated maturity or the contingent obligation to become payable, the applicable agreements will be in default.

WBI Energy Transmission On July 26, 2019, WBI Energy Transmission amended its uncommitted note purchase and private shelf agreement to increase capacity to $ 300.0 million and extend the issuance period to May 16, 2022.

On December 16, 2020, WBI Energy Transmission issued $ 25.0 million of senior notes under the private shelf agreement with a maturity date of December 16, 2035, at an interest rate of 3.26 percent.

WBI Energy Transmission WBI Energy Transmission has a $ 300.0 million uncommitted note purchase and private shelf agreement with an expiration date of May 16, 2022.

WBI Energy Transmission had $ 195.0 million of notes outstanding at December 31, 2021, which reduced the remaining capacity under this uncommitted private shelf agreement to $ 105.0 million.

1 unchanged sentence

Other covenants include a limitation on priority debt and restrictions on the sale of certain assets and the making of certain investments.

On December 23, 2021, WBI Energy Transmission entered into a $ 50.0 million note purchase agreement with a maturity date of December 23, 2041, at an interest rate of 3.67 percent.

The agreement contains customary covenants and provisions, including a covenant of WBI Energy Transmission not to permit, at any time, the ratio of total debt to total capitalization to be greater than 55 percent.

WBI Energy Transmission's ratio of total debt to total capitalization at December 31, 2021, was 38 percent.

17 unchanged sentences

(In thousands)

Short-term lease cost $ 132,449 $ 135,376

Operating lease cost 46,622 45,319

Variable lease cost 1,516 1,319

Short-term lease cost 135,376 120,030

Total lease costs $ 182,014 $ 165,344

$ 180,587 $ 182,014

(Dollars in thousands)

3 unchanged sentences

$ 43,489 $ 45,043

The reconciliation of the future undiscounted cash flows to the operating lease liabilities presented on the Consolidated Balance Sheet at December 31, 2020, was as follows:

The reconciliation of future undiscounted cash flows to operating lease liabilities presented on the Consolidated Balance Sheet at December 31, 2021, was as follows:

(In thousands)

20 unchanged sentences

Balance at end of year $ 468,686 $ 446,919

* Includes $ 20.1 million and $ 18.3 million in 2020 and 2019, respectively, related to regulatory assets.

* Includes $ 19.6 million and $ 20.1 million in 2021 and 2020, respectively, recorded to regulatory assets.

The Company believes that largely all expenses related to asset retirement obligations at the Company's regulated operations will be recovered in rates over time and, accordingly, defers such expenses as regulatory assets.

9 unchanged sentences

The following discusses the most restrictive limitations.

Pursuant to a covenant under a credit agreement, Centennial may only declare or pay distributions if, as of the last day of any fiscal quarter, the ratio of Centennial's average consolidated indebtedness as of the last day of such fiscal quarter and each of the preceding three fiscal quarters to Centennial's Consolidated EBITDA does not exceed 3.5 to 1.

Pursuant to a covenant under its revolving credit agreement, Centennial may only declare or pay distributions if, as of the last day of any fiscal quarter, the ratio of Centennial's average consolidated indebtedness as of the last day of such fiscal quarter and each of the preceding three fiscal quarters to Centennial's Consolidated trailing 12 month EBITDA does not exceed 3.5 to 1.

In addition, certain credit agreements and regulatory limitations of the Company's subsidiaries also contain restrictions on dividend payments.

6 unchanged sentences

Morgan Securities LLC and MUFG Securities Americas Inc., as sales agents.

The Distribution Agreement allows the offering, issuance and sale of up to 6.4 million shares of the Company's common stock in connection with an “at-the-market” offering.

This agreement, as amended, allows the offering, issuance and sale of up to 6.4 million shares of the Company's common stock in connection with an “at-the-market” offering.

The common stock may be offered for sale, from time to time, in accordance with the terms and conditions of the agreement.

The Company did no t issue shares of common stock for the year ended December 31, 2020, pursuant to the “at-the-market” offering.

The Company issued 3.6 million shares of common stock for the year ended December 31, 2019, pursuant to the "at-the-market" offering.

For the year ended December 31, 2019, the Company received net proceeds of $ 94.0 million and paid commissions to the sales agents of approximately $ 950,000 in connection with the sales of common stock under the "at-the-market" offering.

The net proceeds were used for capital expenditures and acquisitions.

As of December 31, 2021, the Company had capacity to issue up to 3.6 million additional shares of common stock under the "at-the-market" offering program.

92 MDU Resources Group, Inc.

Details of the Company's "at-the-market" offering activity for the years ended December 31 was as follows:

(In millions)

Shares issued 2.8 —

Net proceeds * $ 88.8 $ —

Issuance costs $ 1.2 $ —

* Net proceeds were used for capital expenditures.

The K-Plan provides participants the option to invest in the Company's common stock.

12 unchanged sentences

Restricted stock awards

In February 2018, the Company granted restricted stock awards under the long-term performance-based incentive plan to certain key employees.

The Company granted 22,838 shares at a weighted average grant-date fair value of $ 27.48 per share.

The restricted stock awards vested on December 31, 2020.

The fair value of the vested awards was $ 600,000 .

In February 2021, key employees were granted restricted stock awards under the long-term performance-based incentive plan.

The shares vest over three years, contingent on continued employment.

Compensation expense is recognized over the vesting period.

At December 31, 2021, the number of outstanding shares granted was 93,700 with a weighted average grant-date fair value of $ 27.35 per share.

Performance share awards

6 unchanged sentences

February 2021 2021-2023 281,129

MDU Resources Group, Inc.

Under the market condition for these performance share awards, participants may earn from zero to 200 percent of the apportioned target grant of shares based on the Company's total shareholder return relative to that of the selected peer group.

7 unchanged sentences

Blended volatility range 35.37 % - 46.35 %

15.30 % - 15.97 %

19.50 % - 19.69 %

Risk-free interest rate range .02 % - .20 %

1.45 % - 1.62 %

2.46 % - 2.55 %

Weighted average discounted dividends per share $ 3.16 $ 2.91 $ 2.85

2 unchanged sentences

The weighted average grant-date fair value per share for the performance shares applicable to these performance conditions issued in 2021, 2020 and 2019 was $ 27.35 , $ 31.63 and $ 26.25 , respectively.

The fair value of the performance shares that vested during both years ended December 31, 2020 and 2019, was $ 9.7 million.

There were no performance shares that vested in 2018.

MDU Resources Group, Inc.

The fair value of the performance shares that vested during the years ended December 31, 2021, 2020 and 2019, was $ 13.7 million, $ 9.7 million and $ 9.7 million, respectively.

A summary of the status of the performance share awards for the year ended December 31, 2021, was as follows:

4 unchanged sentences

Vested 443,661 28.57

Forfeited 15,037 35.49

Nonvested at end of period 555,047 $ 34.40

Note 14 - Accumulated Other Comprehensive Income (Loss)

The Company's accumulated other comprehensive income (loss) is comprised of losses on derivative instruments qualifying as hedges, postretirement liability adjustments and gain (loss) on available-for-sale investments.

The after-tax changes in the components of accumulated other comprehensive loss at December 31, 2020, 2019 and 2018, were as follows:

Note 14 - Accumulated Other Comprehensive Loss

The Company's accumulated other comprehensive loss is comprised of losses on derivative instruments qualifying as hedges, postretirement liability adjustments and gain (loss) on available-for-sale investments.

The after-tax changes in the components of accumulated other comprehensive loss were as follows:

as Hedges Post-

5 unchanged sentences

At December 31, 2019 $ ( 1,430 ) $ ( 40,734 ) $ 62 $ ( 42,102 )

Other comprehensive income (loss) before reclassifications — ( 6,151 ) 134 ( 6,017 )

Other comprehensive loss before reclassifications — ( 8,395 ) ( 1 ) ( 8,396 )

Amounts reclassified from accumulated other comprehensive loss 446 1,922 52 2,420

1 unchanged sentence

At December 31, 2020 ( 984 ) ( 47,207 ) 113 ( 48,078 )

Other comprehensive loss before reclassifications — ( 8,395 ) ( 1 ) ( 8,396 )

Other comprehensive income (loss) before reclassifications — 4,876 ( 252 ) 4,624

Amounts reclassified from accumulated other comprehensive loss 446 1,870 134 2,450

1 unchanged sentence

At December 31, 2021 $ ( 538 ) $ ( 40,461 ) $ ( 5 ) $ ( 41,004 )

94 MDU Resources Group, Inc.

The following amounts were reclassified out of accumulated other comprehensive loss into net income.

14 unchanged sentences

Total reclassifications $ ( 2,450 ) $ ( 2,420 )

86 MDU Resources Group, Inc.

Note 15 - Income Taxes

18 unchanged sentences

Total income tax expense $ 88,920 $ 84,590 $ 63,279

The TCJA was enacted on December 22, 2017.

The SEC issued rules that allowed for a measurement period of up to 12 months after the enactment date of the TCJA to finalize the recording of the related tax impacts.

The Company reviewed the impacts of the TCJA and completed its assessment of the transitional impacts during the period ending December 31, 2018, of which there were no such material adjustments.

MDU Resources Group, Inc.

Components of deferred tax assets and deferred tax liabilities at December 31 were as follows:

4 unchanged sentences

Operating lease liabilities 26,710 25,963

Payroll tax deferral 14,010 —

Legal and environmental contingencies 9,467 6,601

Asset retirement obligations 8,696 8,060

Legal and environmental contingencies 8,603 9,467

Customer advances 7,683 7,463

Federal renewable energy credit — 5,343

Payroll tax deferral 6,940 14,010

Other 39,960 37,944

1 unchanged sentence

Deferred tax liabilities:

Depreciation and basis differences on property, plant and equipment 536,966 511,867

Basis differences on property, plant and equipment 585,095 536,966

Postretirement 48,302 49,233

Operating lease right-of-use-assets 26,570 25,858

Intangible asset amortization 19,514 18,930

Intangible assets 21,074 19,514

Other 81,070 67,922

3 unchanged sentences

As of December 31, 2021 and 2020, the Company had various state income tax net operating loss carryforwards of $ 164.8 million and $ 151.5 million, respectively, and federal and state income tax credit carryforwards, excluding alternative minimum tax credit carryforwards, of $ 35.6 million and $ 37.1 million, respectively.

Included in the state credits are various regulatory investment tax credits of approximately $ 36.3 million and $ 37.4 million at December 31, 2020 and 2019, respectively.

The state income tax credit carryforwards are due to expire between

MDU Resources Group, Inc.

2021 and 2034.

The state credits include various regulatory investment tax credits of approximately $ 35.0 million and $ 36.3 million at December 31, 2021 and 2020, respectively.

The state income tax credit carryforwards are due to expire between 2024 and 2035.

Changes in tax regulations or assumptions regarding current and future taxable income could require additional valuation allowances in the future.

The following table reconciles the change in the net deferred income tax liability from December 31, 2019, to December 31, 2020, to deferred income tax benefit:

The following table reconciles the change in the net deferred income tax liability from December 31, 2020, to December 31, 2021, to deferred income tax expense:

(In thousands)

3 unchanged sentences

Other ( 2,964 )

Deferred income tax benefit for the period $ ( 1,801 )

Deferred income tax expense for the period $ 60,250

Total income tax expense differs from the amount computed by applying the statutory federal income tax rate to income before taxes.

12 unchanged sentences

Excess deferred income tax amortization ( 10,295 ) ( 2.2 ) ( 12,517 ) ( 2.6 ) ( 11,904 ) ( 3.0 )

TCJA revaluation — — — — ( 5,947 ) ( 1.9 )

TCJA revaluation related to accumulated other comprehensive loss balance — — — — ( 42 ) —

Other ( 3,887 ) ( .8 ) ( 961 ) ( .3 ) ( 3,938 ) ( .9 )

Total income tax expense $ 88,920 19.1 $ 84,590 17.8 $ 63,279 15.9

96 MDU Resources Group, Inc.

The Company and its subsidiaries file income tax returns in the U.S.

20 unchanged sentences

Right-of-use assets obtained in exchange for new operating lease liabilities $ 55,987 $ 54,356 $ 54,880

Issuance of common stock in connection with acquisition $ — $ — $ 18,186

Debt assumed in connection with a business combination $ 10 $ — $ 1,163

Accrual for holdback payment related to a business combination $ — $ 2,500 $ —

88 MDU Resources Group, Inc.

Note 17 - Business Segment Data

7 unchanged sentences

This segment also provides non-regulated cathodic protection and other energy-related services.

In 2020, the pipeline segment divested its regulated and non-regulated natural gas gathering assets.

With the completion of these sales, the segment has exited the natural gas gathering business.

The construction materials and contracting segment mines, processes and sells construction aggregates (crushed stone, sand and gravel);

produces and sells asphalt mix;

and supplies ready-mixed concrete.

and supplies ready-mix concrete.

This segment focuses on vertical integration of its contracting services with its construction materials to support the aggregate-based product lines including aggregate placement, asphalt and concrete paving, and site development and grading.

Although not common to all locations, other products include the sale of cement, liquid asphalt for various commercial and roadway applications, various finished concrete products and other building materials and related contracting services.

Although not common to all locations, other products include the sale of cement, asphalt oil for various commercial and roadway applications, various finished concrete products and other building materials and related contracting services.

This segment operates in the central, southern and western United States, including Alaska and Hawaii.

The construction services segment provides inside and outside specialty contracting services in 44 states plus Washington D.C.

Its inside services include design, construction and maintenance of electrical and communication wiring and infrastructure, fire suppression systems, and mechanical piping and services.

Its outside services include design, construction and maintenance of overhead and underground electrical distribution and transmission lines, substations, external lighting, traffic signalization, and gas pipelines, as well as utility excavation and the manufacture and distribution of transmission line construction equipment.

This segment also constructs and maintains renewable energy projects.

These specialty contracting services are provided to utilities and large manufacturing, commercial, industrial, institutional and governmental customers.

The construction services segment provides a full spectrum of construction services through its electrical and mechanical and transmission and distribution specialty contracting services across the country.

These specialty contracting services are provided to utilities and manufacturing, transportation, commercial, industrial, institutional, renewable and governmental customers.

Its electrical and mechanical contracting services include construction and maintenance of electrical and communication wiring and infrastructure, fire suppression systems, and mechanical piping and services.

Its transmission and distribution contracting services include construction and maintenance of overhead and underground electrical, gas and communication infrastructure, as well as manufacturing and distribution of transmission line construction equipment and tools.

The Other category includes the activities of Centennial Capital, which, through its subsidiary InterSource Insurance Company, insures various types of risks as a captive insurer for certain of the Company's subsidiaries.

1 unchanged sentence

Centennial Capital also owns certain real and personal property.

In addition, the Other category includes certain assets, liabilities and tax adjustments of the holding company primarily associated with corporate functions and certain general and administrative costs (reflected in operation and maintenance expense) and interest expense, which were previously allocated to the refining business and Fidelity and do not meet the criteria for income (loss) from discontinued operations.

The Other category also includes Centennial Resources' former investment in Brazil.

Discontinued operations include the results and supporting activities of Dakota Prairie Refining and Fidelity other than certain general and administrative costs and interest expense as described above.

In addition, the Other category includes certain assets, liabilities and tax adjustments of the holding company primarily associated

MDU Resources Group, Inc.

with corporate functions and certain general and administrative costs (reflected in operation and maintenance expense) and interest expense, which were previously allocated to the refining business and Fidelity and do not meet the criteria for income (loss) from discontinued operations.

Discontinued operations include the supporting activities of Fidelity other than certain general and administrative costs and interest expense as described above.

The information below follows the same accounting policies as described in Note 2.

15 unchanged sentences

Total external operating revenues $ 5,680,733 $ 5,532,750 $ 5,336,776

MDU Resources Group, Inc.

2020 2019 2018

(In thousands)

Intersegment operating revenues:

28 unchanged sentences

Total operating income $ 534,219 $ 544,925 $ 481,220

98 MDU Resources Group, Inc.

2021 2020 2019

(In thousands)

Interest expense:

14 unchanged sentences

Other ( 299 ) ( 398 ) ( 57 )

Total income expense $ 84,590 $ 63,279 $ 47,485

90 MDU Resources Group, Inc.

2020 2019 2018

(In thousands)

Total income tax expense $ 88,920 $ 84,590 $ 63,279

Net income (loss):

21 unchanged sentences

Total capital expenditures (a) $ 935,806 $ 648,279 $ 636,498

MDU Resources Group, Inc.

2021 2020 2019

(In thousands)

Electric (b) $ 1,810,695 $ 2,123,693 $ 1,680,194

15 unchanged sentences

Net property, plant and equipment $ 5,756,388 $ 5,166,939 $ 4,917,142

(a) Capital expenditures for 2020, 2019 and 2018 include noncash transactions such as the issuance of the Company's equity securities in connection with acquisitions, capital expenditure-related accounts payable, AFUDC and accrual of holdback payments in connection with acquisitions totaling $( 15.7 ) million, $ 4.8 million and $ 33.4 million, respectively.

(a) Capital expenditures for 2021, 2020 and 2019 include noncash transactions such as capital expenditure-related accounts payable, AFUDC and accrual of holdback payments in connection with acquisitions totaling $ 38.7 million, $( 15.7 ) million and $ 4.8 million, respectively.

(b) Includes allocations of common utility property.

1 unchanged sentence

cash and cash equivalents, certain accounts receivable, certain investments and other miscellaneous current and deferred assets).

MDU Resources Group, Inc.

Note 18 - Employee Benefit Plans

4 unchanged sentences

These employees were eligible to receive additional defined contribution plan benefits.

In October 2018, the Company transferred the liability of certain participants in the defined benefit pension plan, who are currently receiving benefits, to an annuity company.

The transfer of the benefit payments for these participants reduced the Company's liability and future premiums.

Effective January 1, 2010, eligibility to receive retiree medical benefits was modified at certain of the Company's businesses.

4 unchanged sentences

Effective January 1, 2013, post-65 coverage was replaced by a fixed-dollar subsidy for retirees and spouses to be used to purchase individual insurance through an exchange.

100 MDU Resources Group, Inc.

Changes in benefit obligation and plan assets and amounts recognized in the Consolidated Balance Sheets at December 31 were as follows:

8 unchanged sentences

Plan participants' contributions — — 641 752

Actuarial loss 27,737 40,219 2,203 2,632

Actuarial (gain) loss ( 12,140 ) 27,737 ( 12,802 ) 2,203

Benefits paid ( 23,542 ) ( 23,636 ) ( 3,996 ) ( 4,383 )

24 unchanged sentences

For more information on regulatory assets and liabilities, see Note 6.

92 MDU Resources Group, Inc.

In 2021, the actuarial gain recognized in the benefit obligation was primarily the result of an increase in the discount rate.

In 2020, the actuarial loss recognized in the benefit obligation was primarily the result of a decrease in the discount rate.

For more information on the discount rates, see the table below.

Unrecognized pension actuarial losses in excess of 10 percent of the greater of the projected benefit obligation or the market-related value of assets are amortized over the average life expectancy of plan participants for frozen plans.

6 unchanged sentences

Fair value of plan assets $ 373,109 $ 383,834

MDU Resources Group, Inc.

Form 10-K 101

The components of net periodic benefit cost (credit), other than the service cost component, are included in other income on the Consolidated Statements of Income.

Prior service credit is amortized on a straight-line basis over the average remaining service period of active participants.

These components related to the Company's pension and other postretirement benefit plans for the years ended December 31 were as follows:

17 unchanged sentences

Amortization of actuarial loss ( 1,286 ) ( 1,155 ) ( 904 ) ( 135 ) ( 306 ) ( 110 )

Amortization of prior service (cost) credit

— — — 101 100 ( 220 )

Amortization of prior service credit — — — 100 101 100

Total recognized in accumulated other comprehensive loss

9 unchanged sentences

$ ( 15,138 ) $ ( 2,376 ) $ ( 2,966 ) $ ( 10,890 ) $ ( 5,258 ) $ ( 9,084 )

The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss and regulatory assets or liabilities into net periodic benefit cost in 2021 is $ 8.0 million.

The estimated net loss and prior service credit for the other postretirement benefit plans that will be amortized from accumulated other comprehensive loss and regulatory assets or liabilities into net periodic benefit credit in 2021 are $ 24,000 and $ 1.4 million, respectively.

Prior service credit is amortized on a straight-line basis over the average remaining service period of active participants.

MDU Resources Group, Inc.

Weighted average assumptions used to determine benefit obligations at December 31 were as follows:

16 unchanged sentences

The expected return on plan assets for other postretirement benefits reflects insurance-related investment costs.

102 MDU Resources Group, Inc.

Health care rate assumptions for the Company's other postretirement benefit plans as of December 31 were as follows:

5 unchanged sentences

The Company contributes a flat dollar amount to the monthly premiums which is updated annually on January 1.

Assumed health care cost trend rates may have a significant effect on the amounts reported for the health care plans.

A one percentage point change in the assumed health care cost trend rates would have had the following effects at December 31, 2020:

Point Increase 1 Percentage

Point Decrease

(In thousands)

Effect on total of service and interest cost components $ 182 $ ( 154 )

Effect on postretirement benefit obligation $ 3,846 $ ( 3,304 )

The Company does no t expect to contribute to its defined benefit pension plans in 2021 due to an additional $ 20.0 million contributed to the plans in 2019.

The Company does no t expect to contribute to its defined benefit pension plans in 2022 due to an additional $ 20.0 million contributed to the plans in 2019 creating prefunding credits to be used in future years.

The Company expects to contribute approximately $ 601,000 to its postretirement benefit plans in 2022.

11 unchanged sentences

2027-2031 117,413 17,867 157

94 MDU Resources Group, Inc.

Outside investment managers manage the Company's pension and postretirement assets.

16 unchanged sentences

Government securities are valued mainly using other observable inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers, to be announced prices, future cash flows and other reference data.

The estimated fair value of the pension plans' Level 2 pooled separate accounts are determined using observable inputs in active markets or the net asset value of shares held at year end, or other observable inputs.

Some of these securities are valued using pricing from outside sources.

All investments measured at net asset value in the tables that follow are invested in comingled funds, separate accounts or common collective trusts which do not have publicly quoted prices.

The fair value of the comingled funds, separate accounts and common collective trusts are determined based on the net asset value of the underlying investments.

The fair value of the underlying investments held by the comingled funds, separate accounts and common collective trusts is generally based on quoted prices in active markets.

All investments measured at net asset value in the tables that follow are invested in commingled funds, separate accounts or common collective trusts which do not have publicly quoted prices.

The fair value of the commingled funds, separate accounts and common collective trusts are determined based on the net asset value of the underlying investments.

The fair value of the underlying investments held by the commingled funds, separate accounts and common collective trusts is generally based on quoted prices in active markets.

MDU Resources Group, Inc.

Form 10-K 103

Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value.

11 unchanged sentences

International companies — 1,279 — 1,279

Collective and mutual funds* 177,397 55,788 — 233,185

Collective and mutual funds (a) 167,093 41,383 — 208,476

Corporate bonds — 125,167 — 125,167

1 unchanged sentence

Government securities 7,113 1,902 — 9,015

Investments measured at net asset value — — — 11,430

Pooled separate accounts (b) — 3,088 — 3,088

Investments measured at net asset value (c) — — — 6,457

Total assets measured at fair value $ 181,689 $ 184,963 $ — $ 373,109

* Collective and mutual funds invest approximately 36 percent in corporate bonds, 24 percent in common stock of international companies, 18 percent in common stock of large-cap U.S.

companies, 8 percent in cash equivalents, 5 percent in U.S.

(a) Collective and mutual funds invest approximately 37 percent in corporate bonds, 19 percent in common stock of international companies, 16 percent in common stock of large-cap U.S.

companies, 9 percent in U.S.

Government securities and 19 percent in other investments.

MDU Resources Group, Inc.

(b) Pooled separate accounts are invested 100 percent in cash and cash equivalents.

(c) In accordance with ASC 820 - Fair Value, certain investments that were measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy.

The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items presented in the statement of financial condition.

Fair Value Measurements

9 unchanged sentences

International companies — 1,727 — 1,727

Collective and mutual funds* 160,906 58,894 — 219,800

Collective and mutual funds (a) 177,397 55,788 — 233,185

Corporate bonds — 92,809 — 92,809

1 unchanged sentence

Government securities 11,177 2,695 — 13,872

Investments measured at net asset value (b) — — — 11,430

Total assets measured at fair value $ 201,418 $ 170,986 $ — $ 383,834

* Collective and mutual funds invest approximately 29 percent in common stock of international companies, 21 percent in common stock of large-cap U.S.

companies, 18 percent in U.S.

Government securities, 9 percent in corporate bonds, 6 percent in cash equivalents and 17 percent in other investments.

(a) Collective and mutual funds invest approximately 36 percent in corporate bonds, 24 percent in common stock of international companies, 18 percent in common stock of large-cap U.S.

companies, 8 percent in cash equivalents, 5 percent in U.S.

Government securities and 9 percent in other investments.

(b) In accordance with ASC 820 - Fair Value, certain investments that were measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy.

The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items presented in the statement of financial condition.

The estimated fair values of the Company's other postretirement benefit plans' assets are determined using the market approach.

104 MDU Resources Group, Inc.

The estimated fair value of the other postretirement benefit plans' Level 2 cash equivalents is valued at the net asset value of shares held at year end, based on published market quotations on active markets, or using other known sources including pricing from outside sources.

18 unchanged sentences

Insurance contract (b) — 93,447 — 93,447

Investments measured at net asset value — — — 10

Investments measured at net asset value (c) — — — 3

Total assets measured at fair value $ 2,336 $ 97,819 $ — $ 100,158

(a) Collective and mutual funds invest approximately 37 percent in corporate bonds, 19 percent in common stock of international companies, 16 percent in common stock of large-cap U.S.

companies, 8 percent in cash equivalents, 5 percent in U.S.

companies, 9 percent in U.S.

Government securities and 19 percent in other investments.

2 unchanged sentences

companies, 5 percent in common stock of small-cap U.S.

companies, 1 percent in cash equivalents and 6 percent in other investments.

96 MDU Resources Group, Inc.

companies and 11 percent in other investments.

(c) In accordance with ASC 820 - Fair Value , certain investments that were measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy.

The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items presented in the statement of financial condition.

Fair Value Measurements

11 unchanged sentences

Insurance contract (b) — 96,103 — 96,103

Investments measured at net asset value (c) — — — 10

Total assets measured at fair value $ 1,860 $ 99,769 $ — $ 101,639

(a) Collective and mutual funds invest approximately 29 percent in common stock of international companies, 21 percent in common stock of large-cap U.S.

companies, 18 percent in U.S.

Government securities, 9 percent in corporate bonds, 6 percent in cash equivalents and 17 percent in other investments.

(a) Collective and mutual funds invest approximately 36 percent in corporate bonds, 24 percent in common stock of international companies, 18 percent in common stock of large-cap U.S.

companies, 8 percent in cash equivalents, 5 percent in U.S.

Government securities and 9 percent in other investments.

(b) The insurance contract invests approximately 67 percent in corporate bonds, 10 percent in common stock of large-cap U.S.

1 unchanged sentence

Government securities, 4 percent in common stock of small-cap U.S.

companies and 11 percent in other investments.

companies, 1 percent in cash equivalents and 6 percent in other investments.

(c) In accordance with ASC 820 - Fair Value, certain investments that were measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy.

The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items presented in the statement of financial condition.

MDU Resources Group, Inc.

Form 10-K 105

Nonqualified benefit plans

24 unchanged sentences

Nonqualified benefits $ 6,877 $ 6,890 $ 7,354 $ 7,537 $ 7,609 $ 31,983

MDU Resources Group, Inc.

In 2012, the Company established a nonqualified defined contribution plan for certain key management employees.

In 2020, the plan was frozen to new participants and no new Company contributions will be made to the plan after December 31, 2020.

A new plan was adopted in 2020 to replace the plan originally established in 2012 with similar provisions.

Vesting for participants not fully vested was retained.

Expenses incurred under this plan for 2020, 2019 and 2018 were $ 1.8 million, $ 1.6 million and $ 597,000 , respectively.

A new nonqualified defined contribution plan was adopted in 2020, effective January 1, 2021, to replace the plan originally established in 2012 with similar provisions.

Expenses incurred under these plans for 2021, 2020 and 2019 were $ 2.4 million, $ 1.8 million and $ 1.6 million, respectively.

The amount of investments that the Company anticipates using to satisfy obligations under these plans at December 31 was as follows:

6 unchanged sentences

** Investments of life insurance are carried on plan participants (payable upon the employee's death).

106 MDU Resources Group, Inc.

Defined contribution plans

The Company sponsors various defined contribution plans for eligible employees and the costs incurred under these plans were $ 45.4 million in 2021, $ 50.1 million in 2020 and $ 51.8 million in 2019.

98 MDU Resources Group, Inc.

Multiemployer plans

12 unchanged sentences

(In thousands)

Alaska Laborers-Employers Retirement Fund 91-6028298 - 001

Yellow as of 6/30/2020

Yellow as of 6/30/2019

Implemented $ 828 $ 815 $ 732 No 12/31/2020 *

Construction Industry and Laborers Joint Pension Trust for So Nevada, Plan A 88-0135695 - 001

Red Red Implemented 515 544 346 No 6/30/2023

Edison Pension Plan 936061681 - 001

7 unchanged sentences

IBEW Local 82 Pension Plan 316127268 - 001

Red as of 4/30/2020

Yellow as of 4/30/2019

Implemented 140 158 116 No 4/23/2023

IBEW Local 648 Pension Plan 31-6134845 - 001

Yellow as of 2/28/2020

Yellow as of 2/28/2019

Implemented 526 728 2,175 No 8/29/2021

IBEW Local 82 Pension Plan 31-6127268 - 001

Green as of 6/30/2021

5 unchanged sentences

No 1,528 1,370 1,307 No 3/31/2023

Minnesota Teamsters Construction Division Pension Fund 41-6187751 - 001

Green as of 11/30/2019

Green as of 11/30/2018

No 663 673 740 No 4/30/2021

National Automatic Sprinkler Industry Pension Fund 52-6054620 - 001

Red Red Implemented 954 1,074 738 No 3/31/2021 - 7/31/2024

National Electrical Benefit Fund 530181657 - 001

Green Green No 14,361 14,484 12,679 No 5/31/2021 - 5/31/2026

Pension and Retirement Plan of Plumbers and Pipefitters Local 525 886003864 - 001

Green Green No 4,345 6,266 4,747 No 9/30/2024

Pension Trust Fund for Operating Engineers 946090764 - 001

2 unchanged sentences

Yellow Yellow Implemented 2,615 3,255 2,119 No 6/30/2024

Southwest Marine Pension Trust 95-6123404 - 001

Red Red Implemented 170 132 81 No 1/31/2024

Southern California IBEW-NECA Pension Trust Fund 956392774 - 001

Yellow as of 6/30/2021

Yellow as of 6/30/2020

Implemented 2,746 1,714 1,477 No 6/30/2022 - 5/31/2026

Western Conference of Teamsters Pension Plan 916145047 - 001

Green Green No 3,006 3,025 2,814 No 12/31/2023 - 12/31/2025

Other funds 23,390 23,722 19,598

2 unchanged sentences

MDU Resources Group, Inc.

Form 10-K 107

The Company was listed in the plans' Forms 5500 as providing more than 5 percent of the total contributions for the following plans and plan years:

7 unchanged sentences

IBEW Local 648 Pension Plan 2020 and 2019

IBEW Local 683 Pension Fund Pension Plan 2019

IBEW Local 683 Pension Fund Pension Plan 2020 and 2019

IBEW Local Union No 226 Open End Pension Fund 2020 and 2019

3 unchanged sentences

Pension and Retirement Plan of Plumbers and Pipefitters Local 525 2020 and 2019

Southwest Marine Pension Trust 2020 and 2019

The Company also contributes to a number of multiemployer other postretirement plans under the terms of collective-bargaining agreements that cover its union-represented employees.

3 unchanged sentences

Amounts contributed in 2021, 2020 and 2019 to defined contribution multiemployer plans were $ 54.8 million, $ 54.2 million and $ 49.2 million, respectively.

108 MDU Resources Group, Inc.

Note 19 - Jointly Owned Facilities

25 unchanged sentences

$ 55,082 $ 56,295

100 MDU Resources Group, Inc.

Note 20 - Regulatory Matters

4 unchanged sentences

infrastructure riders, transmission trackers, renewable resource cost adjustment riders, as well as weather normalization and decoupling mechanisms.

The following paragraphs summarize the Company's significant regulatory proceedings and cases by jurisdiction, including the status of each open request.

The following paragraphs summarize the Company's significant open regulatory proceedings and cases by jurisdiction.

The Company is unable to predict the ultimate outcome of these matters, the timing of final decisions of the various regulators and courts, or the effect on the Company's results of operations, financial position or cash flows.

On September 27, 2019, Great Plains filed an application with the MNPUC for a natural gas rate increase of approximately $ 2.9 million annually or approximately 12.0 percent above current rates.

The requested increase was primarily to recover investments in facilities to enhance safety and reliability and the depreciation and taxes associated with the increase in investment.

On November 22, 2019, Great Plains received approval to implement an interim rate increase of approximately $ 2.6 million or approximately 11.0 percent, subject to refund, effective January 1, 2020.

On October 26, 2020, the MNPUC issued an order authorizing an annual increase in revenues of approximately $ 2.6 million or approximately 11.5 percent.

This matter is pending before the MNPUC.

On May 8, 2020, Montana-Dakota filed a request with the MTPSC to use deferred accounting for costs related to the COVID-19 pandemic.

The filing was withdrawn by Montana-Dakota on January 25, 2021.

On June 22, 2020, Montana-Dakota filed an application with the MTPSC for a natural gas rate increase of approximately $ 8.6 million annually or approximately 13.4 percent above current rates.

The requested increase was primarily to recover investments in facilities that were made to enhance system safety and reliability, as well as the depreciation, taxes and operation and maintenance costs associated with this increase in investment.

On January 14, 2021, Montana-Dakota received approval to implement an interim rate increase of approximately $ 4.9 million or approximately 7.7 percent, subject to refund, effective February 1, 2021.

On February 1, 2021, Montana-Dakota filed a stipulation and settlement agreement with the MTPSC reflecting an updated increase of approximately $ 7.3 million annually or approximately 11.4 percent above current rates.

On February 16, 2021, the MTPSC approved the settlement with rates effective on or after March 15, 2021.

On April 24, 2020, Montana-Dakota filed a request with the NDPSC to use deferred accounting for costs related to the COVID-19 pandemic.

On February 3, 2021, the NDPSC approved this request with an accounting order to track expenses and revenues related to the COVID-19 pandemic.

This order had an effective date of April 24, 2020.

On August 26, 2020, Montana-Dakota filed an application with the NDPSC for a natural gas rate increase of approximately $ 9.0 million annually or approximately 7.8 percent above current rates.

The requested increase was primarily to recover investments in facilities to enhance system safety and reliability and the depreciation and taxes associated with the increase in investment.

On December 16, 2020, Montana-Dakota received approval to implement an interim rate increase of approximately $ 6.9 million or approximately 6.0 percent, subject to refund, effective January 1, 2021.

A hearing is scheduled for March 17, 2021.

This matter is pending before the NDPSC.

Great Plains defers the difference between the actual cost of gas spent to serve customers and that recovered from customers on a monthly basis.

Annually, Great Plains prepares a true-up pursuant to the purchased gas adjustment tariff.

On August 30, 2021, the MNPUC issued an order to allow Great Plains recovery of an out-of-cycle cost of gas adjustment of $ 8.8 million over a period of 27 months.

The order was effective September 1, 2021, and is subject to a prudence review by the MNPUC.

The requested increase was for the February 2021 extreme cold weather, primarily in the central United States, and market conditions surrounding the natural gas commodity market.

The MNPUC prudence review is pending with an order to be issued on or before August 29, 2022.

Montana-Dakota has a renewable resource cost adjustment rate tariff that allows for annual adjustments for recent projected capital costs and related expenses for projects determined to be recoverable under the tariff.

On November 1, 2021, Montana-Dakota filed an annual update to its renewable resource cost adjustment requesting to recover a revised revenue requirement of approximately $ 12.4 million annually, not including the prior period true-up adjustment.

The update reflects a decrease of approximately $ 300,000 from the revenues currently included in rates.

On January 6, 2021, the NDPSC approved the increase with rates effective February 1, 2021.

On March 31, 2020, Cascade filed a natural gas general rate case with the OPUC requesting an increase in annual revenue of approximately $ 4.9 million or approximately 7.2 percent, which included a request for an additional recovery of environmental remediation deferred costs of approximately $ 364,000 .

On September 30, 2020, Cascade filed a settlement agreement with the OPUC reflecting an annual increase in revenues of approximately $ 3.2 million or approximately 4.8 percent.

On January 6, 2021, the filing was approved with rates effective February 1, 2021.

On January 21, 2021, Cascade submitted a compliance filing using final costs for plant additions which resulted in a final increase in revenues of approximately $ 2.9 million or approximately 4.3 percent.

On May 27, 2020, Cascade filed a request with the WUTC to use deferred accounting for costs related to the COVID-19 pandemic.

On December 10, 2020, the WUTC approved this request.

The update reflects a decrease of approximately $ 2.0 million from the revenues currently included in rates.

On January 26, 2022, the NDPSC approved the decrease with rates effective February 1, 2022.

MDU Resources Group, Inc.

Form 10-K 109

On June 19, 2020, Cascade filed an application with the WUTC for a natural gas rate increase of approximately $ 13.8 million annually or approximately 5.3 percent above current rates.

The requested increase was primarily to recover investments made in infrastructure upgrades, as well as increased operation and maintenance costs.

Cascade updated its filing on July 24, 2020, to approximately $ 14.3 million annually or approximately 5.5 percent.

Cascade filed a rebuttal case on January 8, 2021, supporting an increase of approximately $ 7.4 million annually or approximately 2.8 percent.

The revised revenue within the rebuttal case reflects several adjustments including depreciation, reduction to return on equity, delays on certain projects, adjustments to income taxes and updates to wages.

On March 11, 2021, Montana-Dakota filed an informational update to the infrastructure rider rate tariff with the SDPUC related to the retirement of Unit 1 at Lewis & Clark Station.

The filing includes the annual revenue requirement offset by the related amortization of the accelerated depreciation on the plant, net of excess deferred income taxes, and the decommissioning costs projected to be incurred in 2021 resulting in no impact to customers.

On November 15, 2021, the SDPUC approved the request.

On September 30, 2021, Cascade filed an application with the WUTC for a natural gas rate increase of approximately $ 13.7 million annually or approximately 5.1 percent above current rates.

The requested increase was primarily to recover investments made in infrastructure upgrades, as well as to recover 2021 wage increases.

The WUTC has 11 months to render a final decision on the rate case.

A hearing is scheduled for February 24, 2021.

This matter is pending before the WUTC.

On September 1, 2020, Montana-Dakota filed an update to its transmission formula rate under the MISO tariff for its multi-value project for $ 12.9 million, which is effective January 1, 2021.

On September 1, 2021, Montana-Dakota filed an update to its transmission formula rate under the MISO tariff for its multi-value project for $ 13.4 million, which was effective January 1, 2022.

Note 21 - Commitments and Contingencies

8 unchanged sentences

At December 31, 2021 and 2020, the Company also recorded corresponding insurance receivables of $ 14.1 million and $ 17.5 million, respectively, and regulatory assets of $ 21.2 million and $ 21.3 million, respectively, related to the accrued liabilities.

The accruals are for contingencies, including litigation, production taxes, royalty claims and environmental matters.

The accruals are for contingencies resulting from litigation, production taxes, royalty claims and environmental matters.

This includes amounts that have been accrued for matters discussed in Environmental matters within this note.

6 unchanged sentences

The riverbed site is part of the Portland, Oregon, Harbor Superfund Site where the EPA wants responsible parties to share in the costs of cleanup.

To date, costs of the overall remedial investigation and feasibility study of the harbor site are being recorded, and initially paid, through an administrative consent order by the LWG.

Investigative costs are indicated to be in excess of $ 100 million.

The EPA issued an ROD in January 2017 adopting a selected remedy which is expected to take 13 years to complete with a then estimated present value of approximately $ 1 billion.

The EPA entered into a consent order with certain other PRPs referred to as the Lower Willamette Group for a remedial investigation and feasibility study.

The Lower Willamette Group has indicated that it has incurred over $ 115.0 million in investigation related costs.

Knife River - Northwest has joined with approximately 100 other PRPs, including the Lower Willamette Group members, in a voluntary process to establish an allocation of costs for the site.

Costs to be allocated would include costs incurred by the Lower Willamette Group as well as costs to implement and fund remediation of the site.

In January 2017, the EPA issued a Record of Decision adopting a selected remedy which is expected to take 13 years to complete with a then estimated present value of approximately $ 1 billion.

Corrective action will not be taken until remedial design/remedial action plans are approved by the EPA.

Knife River - Northwest was also notified that the Portland Harbor Natural Resource Trustee Council intends to perform an injury assessment to natural resources resulting from the release of hazardous substances at the Harbor Superfund Site.

In 2020, the EPA encouraged certain PRPs to enter into consent agreements to perform remedial design covering the entire site and proposed dividing the site into multiple subareas for remedial design.

Certain PRPs executed consent agreements for remedial design work and certain others were issued unilateral administrative orders to perform design work.

Knife River - Northwest is not subject to either a voluntary agreement or unilateral order to perform remedial design work.

In February 2021, the EPA announced that 100 percent of the site's area requiring active cleanup is in the remedial design process.

Site-wide remediation activities are not expected to commence for a number of years.

It is not possible to estimate the costs of natural resource damages until an assessment is completed and allocations are undertaken.

110 MDU Resources Group, Inc.

At this time, Knife River - Northwest does not believe it is a responsible party and has notified Georgia-Pacific West, Inc., that it intends to seek indemnity for liabilities incurred in relation to the above matters pursuant to the terms of their sale agreement.

Knife River - Northwest has entered into an agreement tolling the statute of limitations in connection with the LWG's potential claim for contribution to the costs of the remedial investigation and feasibility study.

LWG has stated its intent to file suit against Knife River - Northwest and others to recover LWG's investigation costs to the extent Knife River - Northwest cannot demonstrate its non-liability for the contamination or is unwilling to participate in an alternative dispute resolution process that has been established to address the matter.

At this time, Knife River - Northwest has agreed to participate in the alternative dispute resolution process.

The Company believes it is not probable that it will incur any material environmental remediation costs or damages in relation to the above referenced matter.

2 unchanged sentences

For more information, see Note 6.

102 MDU Resources Group, Inc.

Demand has been made of Montana-Dakota to participate in investigation and remediation of environmental contamination at a site in Missoula, Montana.

3 unchanged sentences

Preliminary assessment of a portion of the site provided a recommended remedial alternative for that portion of approximately $ 560,000 .

However, the recommended remediation would not address any potential contamination to adjacent parcels that may be impacted by contamination from the manufactured gas plant.

However, the recommended remediation would not address any potential contamination to adjacent parcels that may be impacted from historic operations of the manufactured gas plant.

An environmental assessment was started in 2020, which is estimated to cost approximately $ 823,000 .

The environmental assessment report is expected to be submitted to the MTDEQ in 2022.

Montana-Dakota and another party agreed to voluntarily investigate and remediate the site and that Montana-Dakota will pay two-thirds of the costs for further investigation and remediation of the site.

1 unchanged sentence

Montana-Dakota received notice from a prior insurance carrier that it will participate in payment of defense costs incurred in relation to the claim.

On December 9, 2021, Montana Dakota filed an application with the MTPSC for deferred accounting treatment for costs associated with the investigation and remediation of the site.

This matter is pending before the MTPSC.

A claim was made against Cascade for contamination at the Bremerton Gasworks Superfund Site in Bremerton, Washington, which was received in 1997.

A preliminary investigation has found soil and groundwater at the site contain contaminants requiring further investigation and cleanup.

A preliminary investigation has found soil and groundwater at the site contain impacts requiring further investigation and cleanup.

The EPA conducted a Targeted Brownfields Assessment of the site and released a report summarizing the results of that assessment in August 2009.

The assessment confirmed that contaminants have affected soil and groundwater at the site, as well as sediments in the adjacent Port Washington Narrows.

The assessment confirmed that impacts have affected soil and groundwater at the site, as well as sediments in the adjacent Port Washington Narrows.

In April 2010, the Washington DOE issued notice it considered Cascade a PRP for hazardous substances at the site.

3 unchanged sentences

Based on the site investigation, preliminary remediation alternative costs were provided by consultants in August 2020.

therefore, the accrual for these costs was increased in the third quarter of 2020 by $ 11.1 million.

The preliminary information received through the completion of the data report allowed for the projection of possible costs for a variety of site configurations, remedial measures and potential natural resource damage claims of between $ 13.6 million and $ 71.0 million.

At December 31, 2021, Cascade has accrued $ 2.3 million for the remedial investigation and feasibility study, as well as $ 17.5 million for remediation of this site.

The accrual for remediation cost will be reviewed and adjusted, if necessary, after the completion of the feasibility study.

The accrual for remediation costs will be reviewed and adjusted, if necessary, after the completion of the feasibility study.

In April 2010, Cascade filed a petition with the WUTC for authority to defer the costs incurred in relation to the environmental remediation of this site.

The WUTC approved the petition in September 2010, subject to conditions set forth in the order.

A claim was made against Cascade for contamination at a site in Bellingham, Washington.

Cascade received notice from a party in May 2008 that Cascade may be a PRP, along with other parties, for contamination from a manufactured gas plant owned by Cascade and its predecessor from about 1946 to 1962.

A claim was made against Cascade for impacts at a site in Bellingham, Washington.

Cascade received notice from a party in May 2008 that Cascade may be a PRP, along with other parties, for impacts from a manufactured gas plant owned by Cascade and its predecessor from about 1946 to 1962.

Other PRPs reached an agreed order and work plan with the Washington DOE for completion of a remedial investigation and feasibility study for the site.

A feasibility study prepared for one of the PRPs in March 2018 identifies five cleanup action alternatives for the site with estimated costs ranging from $ 8.0 million to $ 20.4 million with a selected preferred alternative having an estimated total cost of $ 9.3 million.

The other PRPs will develop a cleanup action plan and, after public review of the cleanup action plan, develop design documents.

The other PRPs developed a cleanup action plan and completed public review in 2020.

Development of design documents is anticipated to be completed by the end of 2022 with the remedy construction expected to occur in 2023.

Cascade believes its proportional share of any liability will be relatively small in comparison to other PRPs.

3 unchanged sentences

Cascade has recorded an accrual for this site for an amount that is not material.

The Company has received notices from and entered into agreement with certain of its insurance carriers that they will participate in defense for certain contamination claims subject to full and complete reservations of rights and defenses to insurance coverage.

The Company has received notices from and entered into agreements with certain of its insurance carriers that they will participate in the defense for certain contamination claims subject to full and complete reservations of rights and defenses to insurance coverage.

To the extent these claims are not covered by insurance, the Company intends to seek recovery of remediation costs through its natural gas rates charged to customers.

MDU Resources Group, Inc.

Form 10-K 111

Purchase commitments

12 unchanged sentences

Amounts purchased under various commitments for the years ended December 31, 2021, 2020 and 2019, were $ 849.3 million, $ 666.0 million and $ 686.5 million, respectively.

In 2009, multiple sale agreements were signed to sell the Company's ownership interests in the Brazilian Transmission Lines.

In connection with the sale, Centennial agreed to guarantee payment of any indemnity obligations of certain of the Company's indirect wholly owned subsidiaries.

MDU Resources Group, Inc.

Form 10-K 103

remaining guarantee is expected to expire in 2021.

The guarantees were required by the buyers as a condition to the sale of the Brazilian Transmission Lines.

Certain subsidiaries of the Company have outstanding guarantees to third parties that guarantee the performance of other subsidiaries of the Company.

35 unchanged sentences

112 MDU Resources Group, Inc.

Supplementary Financial Information

Quarterly Data (Unaudited)

The following unaudited information shows selected items by quarter for the years 2020 and 2019:

Quarter Third

Quarter Fourth

(In thousands, except per share amounts)

Operating revenues $ 1,197,373 $ 1,362,928 $ 1,587,289 $ 1,385,160

Operating expenses 1,140,303 1,224,674 1,383,578 1,239,270

Operating income 57,070 138,254 203,711 145,890

Income from continuing operations 25,539 99,842 153,015 112,131

Income (loss) from discontinued operations, net of tax

( 409 ) ( 139 ) 63 163

Net income 25,130 99,703 153,078 112,294

Earnings per share - basic:

Income from continuing operations .13 .50 .76 .56

Discontinued operations, net of tax — — — —

Earnings per share - basic .13 .50 .76 .56

Earnings per share - diluted:

Income from continuing operations .13 .50 .76 .56

Discontinued operations, net of tax — — — —

Earnings per share - diluted .13 .50 .76 .56

Weighted average common shares outstanding:

Basic 200,440 200,522 200,522 200,522

Diluted 200,456 200,539 200,619 200,923

Operating revenues $ 1,091,191 $ 1,303,573 $ 1,563,799 $ 1,378,213

Operating expenses 1,026,973 1,206,262 1,374,329 1,247,992

Operating income 64,218 97,311 189,470 130,221

Income from continuing operations 41,089 63,145 136,128 94,804

Income (loss) from discontinued operations, net of tax

( 163 ) ( 1,320 ) 1,509 261

Net income 40,926 61,825 137,637 95,065

Earnings per share - basic:

Income from continuing operations .21 .32 .68 .47

Discontinued operations, net of tax — ( .01 ) .01 —

Earnings per share - basic .21 .31 .69 .47

Earnings per share - diluted:

Income from continuing operations .21 .32 .68 .47

Discontinued operations, net of tax — ( .01 ) .01 —

Earnings per share - diluted .21 .31 .69 .47

Weighted average common shares outstanding:

Basic 196,401 198,270 199,343 200,383

Diluted 196,414 198,287 199,383 200,478

Certain operations of the Company are highly seasonal and revenues from and certain expenses for such operations may fluctuate significantly among quarterly periods.

Accordingly, quarterly financial information may not be indicative of results for a full year.

MDU Resources Group, Inc.

Form 10-K 105

The following abbreviations and acronyms used in Notes to Consolidated Financial Statements are defined below:

4 unchanged sentences

Big Stone Station 475-MW coal-fired electric generating facility near Big Stone City, South Dakota (22.7 percent ownership)

Brazilian Transmission Lines Company's former investment in companies owning three electric transmission lines in Brazil

BSSE 345-kilovolt transmission line from Ellendale, North Dakota, to Big Stone City, South Dakota (50 percent ownership)

4 unchanged sentences

Centennial's Consolidated EBITDA Centennial's consolidated net income from continuing operations plus the related interest expense, taxes, depreciation, depletion, amortization of intangibles and any non-cash charge relating to asset impairment for the preceding 12-month period

Centennial Resources Centennial Energy Resources LLC, a direct wholly owned subsidiary of Centennial

Company MDU Resources Group, Inc.

(formerly known as MDUR Newco), which, as the context requires, refers to the previous MDU Resources Group, Inc.

prior to January 1, 2019, and the new holding company of the same name after January 1, 2019

COVID-19 Coronavirus disease 2019

1 unchanged sentence

Coyote Station 427-MW coal-fired electric generating facility near Beulah, North Dakota (25 percent ownership)

Dakota Prairie Refining Dakota Prairie Refining, LLC, a limited liability company previously owned by WBI Energy and Calumet Specialty Products Partners, L.P.

(previously included in the Company's refining segment)

EBITDA Earnings before interest, taxes, depreciation, depletion and amortization

6 unchanged sentences

GAAP Accounting principles generally accepted in the United States of America

Great Plains Great Plains Natural Gas Co., a public utility division of the Company prior to the closing of the Holding Company Reorganization and a public utility division of Montana-Dakota as of January 1, 2019

Holding Company Reorganization The internal holding company reorganization completed on January 1, 2019, pursuant to the agreement and plan of merger, dated as of December 31, 2018, by and among Montana-Dakota, the Company and MDUR Newco Sub, which resulted in the Company becoming a holding company and owning all of the outstanding capital stock of Montana-Dakota.

Great Plains Great Plains Natural Gas Co., a public utility division of Montana-Dakota

IBEW International Brotherhood of Electrical Workers

4 unchanged sentences

LIBOR London Inter-bank Offered Rate

LWG Lower Willamette Group

MDU Construction Services MDU Construction Services Group, Inc., a direct wholly owned subsidiary of Centennial

MDU Energy Capital MDU Energy Capital, LLC, a direct wholly owned subsidiary of the Company

MDUR Newco MDUR Newco, Inc., a public holding company created by implementing the Holding Company Reorganization, now known as the Company

MDUR Newco Sub MDUR Newco Sub, Inc., a direct, wholly owned subsidiary of MDUR Newco, which was merged with and into Montana-Dakota in the Holding Company Reorganization

106 MDU Resources Group, Inc.

MEPP Multiemployer pension plan

MISO Midcontinent Independent System Operator, Inc.

MISO Midcontinent Independent System Operator, Inc., the organization that provides open-access transmission services and monitors the high-voltage transmission system in the Midwest United States and Manitoba, Canada and a southern United States region which includes much of Arkansas, Mississippi and Louisiana

MMBtu Million Btu

1 unchanged sentence

Montana-Dakota Montana-Dakota Utilities Co.

(formerly known as MDU Resources Group, Inc.), a public utility division of the Company prior to the closing of the Holding Company Reorganization and a direct wholly owned subsidiary of MDU Energy Capital as of January 1, 2019

a direct wholly owned subsidiary of MDU Energy Capital

MTDEQ Montana Department of Environmental Quality

MTPSC Montana Public Service Commission

NDPSC North Dakota Public Service Commission

OPUC Oregon Public Utility Commission

PRP Potentially Responsible Party

ROD Record of Decision

RP Rehabilitation plan

1 unchanged sentence

SEC United States Securities and Exchange Commission

MDU Resources Group, Inc.

Form 10-K 113

Securities Act Securities Act of 1933, as amended

SOFR Secured Overnight Financing Rate

TCJA Tax Cuts and Jobs Act

VIE Variable interest entity

4 unchanged sentences

Wygen III 100-MW coal-fired electric generating facility near Gillette, Wyoming (25 percent ownership)

WYPSC Wyoming Public Service Commission

114 MDU Resources Group, Inc.

Form 10-K 107

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data