Edgar Filing: MDU RESOURCES GROUP INC

mduform10-q.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934

	For The Quarterly Period Ended June 30, 2011

	OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _____________ to ______________

Commission file number 1-3480

MDU Resources Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware		41-0423660
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1200 West Century Avenue

P.O. Box 5650

Bismarck, North Dakota 58506-5650

(Address of principal executive offices)

(Zip Code)

(701) 530-1000

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x.

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of July 29, 2011: 188,793,564 shares.

DEFINITIONS

The following abbreviations and acronyms used in this Form 10-Q are defined below:

Abbreviation or Acronym

2010 Annual Report	Company's Annual Report on Form 10-K for the year ended December 31, 2010
Alusa	Tecnica de Engenharia Electrica - Alusa
ASC	FASB Accounting Standards Codification
BART	Best available retrofit technology
Bbl	Barrel
Big Stone Station	450-MW coal-fired electric generating facility near Big Stone City, South Dakota (22.7 percent ownership)
Big Stone Station II	Formerly proposed coal-fired electric generating facility near Big Stone City, South Dakota (the Company had anticipated ownership of at least 116 MW)
Bitter Creek	Bitter Creek Pipelines, LLC, an indirect wholly owned subsidiary of WBI Holdings
Brazilian Transmission Lines	Company's equity method investment in the company owning ECTE, ENTE and ERTE (ownership interests in ENTE and ERTE and a portion of the ownership interests in ECTE were sold in the fourth quarter of 2010)
Btu	British thermal unit
Cascade	Cascade Natural Gas Corporation, an indirect wholly owned subsidiary of MDU Energy Capital
CELESC	Centrais Elétricas de Santa Catarina S.A.
CEM	Colorado Energy Management, LLC, a former direct wholly owned subsidiary of Centennial Resources (sold in the third quarter of 2007)
CEMIG	Companhia Energética de Minas Gerais
Centennial	Centennial Energy Holdings, Inc., a direct wholly owned subsidiary of the Company
Centennial Capital	Centennial Holdings Capital LLC, a direct wholly owned subsidiary of Centennial
Centennial Resources	Centennial Energy Resources LLC, a direct wholly owned subsidiary of Centennial
Clean Air Act	Federal Clean Air Act
Colorado State District Court	Colorado Thirteenth Judicial District Court, Yuma County
Company	MDU Resources Group, Inc.
dk	Decatherm
Dodd-Frank Act	Dodd-Frank Wall Street Reform and Consumer Protection Act
ECTE	Company's equity method investment in Empresa Catarinense de Transmissão de Energia S.A. (10.01 percent ownership interest at June 30, 2011, 14.99 percent ownership interest sold in the fourth quarter of 2010)
ENTE	Empresa Norte de Transmissão de Energia S.A. (entire 13.3 percent ownership interest sold in the fourth quarter of 2010)
EPA	U.S. Environmental Protection Agency

ERISA	Employee Retirement Income Security Act of 1974
ERTE	Empresa Regional de Transmissão de Energia S.A. (entire 13.3 percent ownership interest sold in the fourth quarter of 2010)
Exchange Act	Securities Exchange Act of 1934, as amended
FASB	Financial Accounting Standards Board
Fidelity	Fidelity Exploration & Production Company, a direct wholly owned subsidiary of WBI Holdings
GAAP	Accounting principles generally accepted in the United States of America
GHG	Greenhouse gas
Great Plains	Great Plains Natural Gas Co., a public utility division of the Company
IFRS	International Financial Reporting Standards
Intermountain	Intermountain Gas Company, an indirect wholly owned subsidiary of MDU Energy Capital
IPUC	Idaho Public Utilities Commission
Knife River	Knife River Corporation, a direct wholly owned subsidiary of Centennial
Knife River – Northwest	Knife River Corporation – Northwest, an indirect wholly owned subsidiary of Knife River (previously Morse Bros., Inc., name changed effective January 1, 2010)
kWh	Kilowatt-hour
LPP	Lea Power Partners, LLC, a former indirect wholly owned subsidiary of Centennial Resources (member interests were sold in October 2006)
LTM	LTM, Inc., an indirect wholly owned subsidiary of Knife River
LWG	Lower Willamette Group
MBbls	Thousands of barrels
Mcf	Thousand cubic feet
MDU Brasil	MDU Brasil Ltda., an indirect wholly owned subsidiary of Centennial Resources
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
Mine Safety Act	Federal Mine Safety and Health Act of 1977, as amended by the Mine Improvement and New Emergency Response Act of 2006
MMBtu	Million Btu
MMcf	Million cubic feet
MMcfe	Million cubic feet equivalent – natural gas equivalents are determined using the ratio of six Mcf of natural gas to one Bbl of oil
MMdk	Million decatherms
Montana-Dakota	Montana-Dakota Utilities Co., a public utility division of the Company
Montana District Court	Montana Seventeenth Judicial District Court, Phillips County
MPPAA	Multiemployer Pension Plan Amendments Act of 1980

MTPSC	Montana Public Service Commission
MW	Megawatt
NDPSC	North Dakota Public Service Commission
Oil	Includes crude oil, condensate and natural gas liquids
OPUC	Oregon Public Utility Commission
Oregon Circuit Court	Circuit Court of the State of Oregon for the County of Klamath
Oregon DEQ	Oregon State Department of Environmental Quality
Prairielands	Prairielands Energy Marketing, Inc., an indirect wholly owned subsidiary of WBI Holdings
PRP	Potentially Responsible Party
RCRA	Resource Conservation and Recovery Act
ROD	Record of Decision
SEC	U.S. Securities and Exchange Commission
Securities Act	Securities Act of 1933, as amended
SourceGas	SourceGas Distribution LLC
WBI Holdings	WBI Holdings, Inc., a direct wholly owned subsidiary of Centennial
Williston Basin	Williston Basin Interstate Pipeline Company, an indirect wholly owned subsidiary of WBI Holdings
WUTC	Washington Utilities and Transportation Commission

INTRODUCTION

The Company is a diversified natural resource company, which was incorporated under the laws of the state of Delaware in 1924. Its principal executive offices are at 1200 West Century Avenue, P.O. Box 5650, Bismarck, North Dakota 58506-5650, telephone (701) 530-1000.

Montana-Dakota, through the electric and natural gas distribution segments, generates, transmits and distributes electricity and distributes natural gas in Montana, North Dakota, South Dakota and Wyoming. Cascade distributes natural gas in Oregon and Washington. Intermountain distributes natural gas in Idaho. Great Plains distributes natural gas in western Minnesota and southeastern North Dakota. These operations also supply related value-added services.

The Company, through its wholly owned subsidiary, Centennial, owns WBI Holdings (comprised of the pipeline and energy services and the natural gas and oil production segments), Knife River (construction materials and contracting segment), MDU Construction Services (construction services segment), Centennial Resources and Centennial Capital (both reflected in the Other category). For more information on the Company's business segments, see Note 15.

INDEX

Part I -- Financial Information	Page

Consolidated Statements of Income --
Three and Six Months Ended June 30, 2011 and 2010	7

Consolidated Balance Sheets --
June 30, 2011 and 2010, and December 31, 2010	9

Consolidated Statements of Cash Flows --
Six Months Ended June 30, 2011 and 2010	10

Notes to Consolidated Financial Statements	11

Management's Discussion and Analysis of Financial Condition and Results of Operations	36

Quantitative and Qualitative Disclosures About Market Risk	58

Controls and Procedures	60

Part II -- Other Information

Legal Proceedings	60

Risk Factors	60

Unregistered Sales of Equity Securities and Use of Proceeds	63

Other Information	64

Exhibits	67

Signatures	68

Exhibit Index	69

Exhibits

PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MDU RESOURCES GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
	2011			2010		2011		2010
	(In thousands, except per share amounts)
Operating revenues:
Electric, natural gas distribution and pipeline and energy services	$	274,538		$	272,177	$	752,018	$	732,422
Construction services, natural gas and oil production, construction materials and contracting, and other		656,219			634,267		1,080,544		1,008,799
Total operating revenues		930,757			906,444		1,832,562		1,741,221
Operating expenses:
Fuel and purchased power		14,474			13,106		31,428		30,017
Purchased natural gas sold		101,538			97,441		346,224		331,133
Operation and maintenance:
Electric, natural gas distribution and pipeline and energy services		70,028			68,437		137,989		131,421
Construction services, natural gas and oil production, construction materials and contracting, and other		536,608			516,854		896,408		830,642
Depreciation, depletion and amortization		83,290			81,547		167,964		160,225
Taxes, other than income		42,516			40,397		92,181		86,192
Total operating expenses		848,454			817,782		1,672,194		1,569,630

Operating income		82,303			88,662		160,368		171,591

Earnings from equity method investments		949			2,260		1,433		4,443

Other income		1,908			2,686		3,809		5,188

Interest expense		20,036			20,490		42,053		41,006

Income before income taxes		65,124			73,118		123,557		140,216

Income taxes		19,889			24,180		35,793		49,506

Income from continuing operations		45,235			48,938		87,764		90,710

Income (loss) from discontinued operations, net of tax (Note 9)		(168	)		—		280		—

Net income		45,067			48,938		88,044		90,710

Dividends on preferred stocks		171			171		342		343

Earnings on common stock	$	44,896		$	48,767	$	87,702	$	90,367

(continued on next page)

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

MDU RESOURCES GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
	(In thousands, except per share amounts)
Earnings per common share -- basic:
Earnings before discontinued operations	$	.24	$	.26	$	.46	$	.48
Discontinued operations, net of tax		—		—		—		—
Earnings per common share -- basic	$	.24	$	.26	$	.46	$	.48

Earnings per common share -- diluted:
Earnings before discontinued operations	$	.24	$	.26	$	.46	$	.48
Discontinued operations, net of tax		—		—		—		—
Earnings per common share -- diluted	$	.24	$	.26	$	.46	$	.48

Dividends per common share	$	.1625	$	.1575	$	.3250	$	.3150

Weighted average common shares outstanding -- basic		188,794		188,129		188,732		188,047

Weighted average common shares outstanding -- diluted		188,968		188,267		188,903		188,198

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

MDU RESOURCES GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30, 2011			June 30, 2010			December 31, 2010
(In thousands, except shares and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	107,768		$	65,792		$	222,074
Receivables, net		566,366			502,454			583,743
Inventories		277,327			260,163			252,897
Deferred income taxes		33,732			17,755			32,890
Commodity derivative instruments		14,234			24,932			15,123
Prepayments and other current assets		71,604			98,203			60,441
Total current assets		1,071,031			969,299			1,167,168
Investments		116,368			142,212			103,661
Property, plant and equipment		7,394,616			7,085,632			7,218,503
Less accumulated depreciation, depletion and amortization		3,236,417			3,000,663			3,103,323
Net property, plant and equipment		4,158,199			4,084,969			4,115,180
Deferred charges and other assets:
Goodwill		634,931			634,654			634,633
Other intangible assets, net		23,337			26,199			25,271
Other		253,515			255,473			257,636
Total deferred charges and other assets		911,783			916,326			917,540
Total assets	$	6,257,381		$	6,112,806		$	6,303,549

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings	$	—		$	3,700		$	20,000
Long-term debt due within one year		62,571			72,551			72,797
Accounts payable		304,049			266,069			301,132
Taxes payable		45,065			39,976			56,186
Dividends payable		30,850			29,802			30,773
Accrued compensation		37,978			35,989			40,121
Commodity derivative instruments		18,686			20,160			24,428
Other accrued liabilities		224,220			172,446			222,639
Total current liabilities		723,419			640,693			768,076
Long-term debt		1,369,534			1,508,714			1,433,955
Deferred credits and other liabilities:
Deferred income taxes		727,562			627,256			672,269
Other liabilities		711,516			708,403			736,447
Total deferred credits and other liabilities		1,439,078			1,335,659			1,408,716
Commitments and contingencies
Stockholders' equity:
Preferred stocks		15,000			15,000			15,000
Common stockholders' equity:
Common stock
Shares issued -- $1.00 par value, 189,332,485 at June 30, 2011, 188,672,532 at June 30, 2010 and 188,901,379 at December 31, 2010		189,332			188,673			188,901
Other paid-in capital		1,033,366			1,020,206			1,026,349
Retained earnings		1,523,546			1,407,950			1,497,439
Accumulated other comprehensive loss		(32,268	)		(463	)		(31,261	)
Treasury stock at cost – 538,921 shares		(3,626	)		(3,626	)		(3,626	)
Total common stockholders' equity		2,710,350			2,612,740			2,677,802
Total stockholders' equity		2,725,350			2,627,740			2,692,802
Total liabilities and stockholders' equity	$	6,257,381		$	6,112,806		$	6,303,549

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

MDU RESOURCES GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2011			2010
	(In thousands)
Operating activities:
Net income	$	88,044		$	90,710
Income from discontinued operations, net of tax		280			—
Income from continuing operations		87,764			90,710
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		167,964			160,225
Earnings, net of distributions, from equity method investments		512			(1,899	)
Deferred income taxes		60,960			35,758
Changes in current assets and liabilities, net of acquisitions:
Receivables		17,259			27,149
Inventories		(29,154	)		(12,442	)
Other current assets		(19,600	)		(32,471	)
Accounts payable		(3,197	)		(13,164	)
Other current liabilities		(9,753	)		(45,613	)
Other noncurrent changes		(17,969	)		(4,882	)
Net cash provided by continuing operations		254,786			203,371
Net cash used in discontinued operations		(491	)		—
Net cash provided by operating activities		254,295			203,371

Investing activities:
Capital expenditures		(224,934	)		(237,535	)
Acquisitions, net of cash acquired		(157	)		(106,548	)
Net proceeds from sale or disposition of property		16,145			11,972
Investments		(9,955	)		1,228
Net cash used in continuing operations		(218,901	)		(330,883	)
Net cash provided by discontinued operations		—			—
Net cash used in investing activities		(218,901	)		(330,883	)

Financing activities:
Repayment of short-term borrowings		(20,000	)		(6,600	)
Issuance of long-term debt		6,000			82,992
Repayment of long-term debt		(81,202	)		(814	)
Proceeds from issuance of common stock		5,744			1,739
Dividends paid		(61,623	)		(59,545	)
Excess tax benefit on stock-based compensation		1,248			548
Net cash provided by (used in) continuing operations		(149,833	)		18,320
Net cash provided by discontinued operations		—			—
Net cash provided by (used in) financing activities		(149,833	)		18,320
Effect of exchange rate changes on cash and cash equivalents		133			(130	)
Decrease in cash and cash equivalents		(114,306	)		(109,322	)
Cash and cash equivalents -- beginning of year		222,074			175,114
Cash and cash equivalents -- end of period	$	107,768		$	65,792

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

MDU RESOURCES GROUP, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

June 30, 2011 and 2010

(Unaudited)

1.	Basis of presentation

The accompanying consolidated interim financial statements were prepared in conformity with the basis of presentation reflected in the consolidated financial statements included in the Company's 2010 Annual Report, and the standards of accounting measurement set forth in the interim reporting guidance in the ASC and any amendments thereto adopted by the FASB. Interim financial statements do not include all disclosures provided in annual financial statements and, accordingly, these financial statements should be read in conjunction with those appearing in the 2010 Annual Report. The information is unaudited but includes all adjustments that are, in the opinion of management, necessary for a fair presentation of the accompanying consolidated interim financial statements and are of a normal recurring nature. Depreciation, depletion and amortization expense is reported separately on the Consolidated Statements of Income and therefore is excluded from the other line items within operating expenses. Management has also evaluated the impact of events occurring after June 30, 2011, up to the date of issuance of these consolidated interim financial statements.

2.	Seasonality of operations

Some of the Company's operations are highly seasonal and revenues from, and certain expenses for, such operations may fluctuate significantly among quarterly periods. Accordingly, the interim results for particular businesses, and for the Company as a whole, may not be indicative of results for the full fiscal year.

3.	Accounts receivable and allowance for doubtful accounts

Accounts receivable consists primarily of trade receivables from the sale of goods and services which are recorded at the invoiced amount net of allowance for doubtful accounts, and costs and estimated earnings in excess of billings on uncompleted contracts. The total balance of receivables past due 90 days or more was $41.4 million and $21.6 million as of June 30, 2011 and December 31, 2010, respectively.

The allowance for doubtful accounts is determined through a review of past due balances and other specific account data. Account balances are written off when management determines the amounts to be uncollectible. The Company's allowance for doubtful accounts as of June 30, 2011 and 2010, and December 31, 2010, was $14.2 million, $14.9 million and $15.3 million, respectively.

4.	Inventories and natural gas in storage

Inventories, other than natural gas in storage for the Company's regulated operations, were stated at the lower of average cost or market value. Natural gas in storage for the Company's regulated operations is generally carried at average cost, or cost using the last-in, first-out method. The portion of the cost of natural gas in storage expected to be used within one year was included in inventories. Inventories consisted of:

	June 30, 2011		June 30, 2010		December 31, 2010
	(In thousands)
Aggregates held for resale	$	82,936	$	83,535	$	79,894
Materials and supplies		65,363		62,070		57,324
Natural gas in storage (current)		11,993		14,269		34,557
Merchandise for resale		33,435		28,438		30,182
Asphalt oil		55,729		51,956		25,234
Other		27,871		19,895		25,706
Total	$	277,327	$	260,163	$	252,897

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 other assets and was $47.2 million, $59.3 million, and $48.0 million at June 30, 2011 and 2010, and December 31, 2010, respectively.

5.	Earnings per common share

Basic earnings per common share were computed by dividing earnings on common stock by the weighted average number of shares of common stock outstanding during the applicable period. Diluted earnings per common share were computed by dividing earnings on common stock by the total of the weighted average number of shares of common stock outstanding during the applicable period, plus the effect of outstanding stock options and performance share awards. For the three and six months ended June 30, 2011 and 2010, there were no shares excluded from the calculation of diluted earnings per share. Common stock outstanding includes issued shares less shares held in treasury.

6.	Cash flow information

Cash expenditures for interest and income taxes were as follows:

	Six Months Ended June 30,
	2011		2010
	(In thousands)
Interest, net of amount capitalized	$	40,646	$	39,652
Income taxes	$	12,887	$	36,011

7.	New accounting standards

Improving Disclosure About Fair Value Measurements In January 2010, the FASB issued guidance related to improving disclosures about fair value measurements. The guidance requires separate disclosures of the amounts of transfers in and out of Level 1 and Level 2 fair value measurements and a description of the reason for such transfers. In the reconciliation for Level 3 fair value measurements using significant unobservable inputs,

information about purchases, sales, issuances and settlements shall be presented separately. These disclosures are required for interim and annual reporting periods and were effective for the Company on January 1, 2010, except for the disclosures related to the purchases, sales, issuances and settlements in the roll forward activity of Level 3 fair value measurements, which were effective on January 1, 2011. The guidance requires additional disclosures, but it will not impact the Company's financial position, results of operations or cash flows.

Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs In May 2011, the FASB issued guidance on fair value measurement and disclosure requirements. The guidance generally clarifies the application of existing requirements on topics including the concepts of highest and best use and valuation premise and disclosing quantitative information about the unobservable inputs used in the measurement of instruments categorized within Level 3 of the fair value hierarchy. Additionally, the guidance includes changes on topics such as measuring fair value of financial instruments that are managed within a portfolio and additional disclosure for fair value measurements categorized within Level 3 of the fair value hierarchy. This guidance is effective for the Company on January 1, 2012. The Company is evaluating the effects that adoption of this guidance will have.

Presentation of Comprehensive Income In June 2011, the FASB issued guidance on the presentation of comprehensive income. This guidance eliminates the option of presenting components of other comprehensive income as part of the statement of stockholders' equity. The guidance will allow the Company the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income in either a single continuous statement of comprehensive income or in two separate but consecutive statements. This guidance is effective for the Company on January 1, 2012, and must be applied retrospectively. The Company is evaluating the effects of this guidance on disclosure, but it will not impact the Company's financial position, results of operations or cash flows.

8.	Comprehensive income

Comprehensive income is the sum of net income as reported and other comprehensive income (loss). The Company's other comprehensive income (loss) resulted from gains (losses) on derivative instruments qualifying as hedges, foreign currency translation adjustments and gains on available-for-sale investments. For more information on derivative instruments, see Note 12.

Comprehensive income, and the components of other comprehensive income (loss) and related tax effects, were as follows:

	Three Months Ended June 30,
	2011			2010
	(In thousands)
Net income	$	45,067		$	48,938
Other comprehensive income (loss):
Net unrealized gain (loss) on derivative instruments qualifying as hedges:
Net unrealized gain on derivative instruments arising during the period, net of tax of $10,576 and $2,588 in 2011 and 2010, respectively		17,057			4,637
Less: Reclassification adjustment for gain (loss) on derivative instruments included in net income, net of tax of $(2,191) and $3,191 in 2011 and 2010, respectively		(3,650	)		5,259
Net unrealized gain (loss) on derivative instruments qualifying as hedges		20,707			(622	)
Foreign currency translation adjustment, net of tax of $32 and $(307) in 2011 and 2010, respectively		50			(476	)
Net unrealized gains on available-for-sale investments, net of tax of $47 in 2011		87			—
		20,844			(1,098	)
Comprehensive income	$	65,911		$	47,840

	Six Months Ended June 30,
	2011			2010
	(In thousands)
Net income	$	88,044		$	90,710
Other comprehensive income (loss):
Net unrealized gain (loss) on derivative instruments qualifying as hedges:
Net unrealized gain (loss) on derivative instruments arising during the period, net of tax of $(388) and $11,962 in 2011 and 2010, respectively		(1,217	)		19,932
Less: Reclassification adjustment for gain (loss) on derivative instruments included in net income, net of tax of $91 and $(1,166) in 2011 and 2010, respectively		155			(1,850	)
Net unrealized gain (loss) on derivative instruments qualifying as hedges		(1,372	)		21,782
Foreign currency translation adjustment, net of tax of $170 and $(929) in 2011 and 2010, respectively		262			(1,412	)
Net unrealized gains on available-for-sale investments, net of tax of $55 in 2011		103			—
		(1,007	)		20,370
Comprehensive income	$	87,037		$	111,080

9.	Discontinued operations

In 2007, Centennial Resources sold CEM to Bicent Power LLC. In connection with the sale, Centennial Resources agreed to indemnify Bicent Power LLC and its affiliates from certain third party claims arising out of or in connection with Centennial Resources' ownership or operation of CEM prior to the sale. In addition, Centennial had previously guaranteed CEM's obligations under a construction contract. The Company incurred legal expenses related to this matter and had an income tax benefit related to favorable resolution of certain tax matters in the first quarter of 2011, which are reflected as discontinued operations in the consolidated financial statements and accompanying notes. Discontinued operations are included in the Other category. For further information, see Note 18.

10.	Equity method investments

Investments in companies in which the Company has the ability to exercise significant influence over operating and financial policies are accounted for using the equity method. The Company's equity method investments at June 30, 2011, include ECTE.

In August 2006, MDU Brasil acquired ownership interests in the Brazilian Transmission Lines. The electric transmission lines are primarily in northeastern and southern Brazil. The transmission contracts provide for revenues denominated in the Brazilian Real, annual inflation adjustments and change in tax law adjustments. The functional currency for the Brazilian Transmission Lines is the Brazilian Real.

In the fourth quarter of 2009, multiple sales agreements were signed with three separate parties for the Company to sell its ownership interests in the Brazilian Transmission Lines. In November 2010, the Company completed the sale of its entire ownership interest in

ENTE and ERTE and 59.96 percent of its ownership interest in ECTE. One of the parties will purchase the Company's remaining ownership interests in ECTE over a four-year period. Alusa, CEMIG and CELESC hold the remaining ownership interests in ECTE.

At June 30, 2011 and 2010, and December 31, 2010, the Company's equity method investments had total assets of $107.7 million, $369.9 million and $107.4 million, respectively, and long-term debt of $49.6 million, $157.1 million and $30.1 million, respectively. The Company's investment in its equity method investments was approximately $11.4 million, $57.9 million and $10.9 million, including undistributed earnings of $2.1 million, $11.1 million and $1.9 million, at June 30, 2011 and 2010, and December 31, 2010, respectively.

11.	Goodwill and other intangible assets

The changes in the carrying amount of goodwill were as follows:

	Balance		Goodwill		Balance
	as of		Acquired		as of
Six Months Ended	January 1,		During		June 30,
June 30, 2011		2011*	the Year**			2011*
	(In thousands)
Electric	$	—	$	—	$	—
Natural gas distribution		345,736		—		345,736
Construction services		102,870		298		103,168
Pipeline and energy services		9,737		—		9,737
Natural gas and oil production		—		—		—
Construction materials and contracting		176,290		—		176,290
Other		—		—		—
Total	$	634,633	$	298	$	634,931
Balance is presented net of accumulated impairment of $12.3 million at the pipeline and energy services segment, which occurred in prior periods. * Includes a purchase price adjustment that was not material related to an acquisition in a prior period.

Six Months Ended June 30, 2010	Balance as of January 1, 2010*		Goodwill Acquired During the Year**		Balance as of June 30, 2010*
	(In thousands)
Electric	$	—	$	—	$	—
Natural gas distribution		345,736		—		345,736
Construction services		100,127		2,764		102,891
Pipeline and energy services		7,857		1,880		9,737
Natural gas and oil production		—		—		—
Construction materials and contracting		175,743		547		176,290
Other		—		—		—
Total	$	629,463	$	5,191	$	634,654
Balance is presented net of accumulated impairment of $12.3 million at the pipeline and energy services segment, which occurred in prior periods. * Includes purchase price adjustments that were not material related to acquisitions in a prior period.

	Balance		Goodwill		Balance
	as of		Acquired		as of
Year Ended	January 1,		During the		December 31,
December 31, 2010		2010*	Year**			2010*
	(In thousands)
Electric	$	—	$	—	$	—
Natural gas distribution		345,736		—		345,736
Construction services		100,127		2,743		102,870
Pipeline and energy services		7,857		1,880		9,737
Natural gas and oil production		—		—		—
Construction materials and contracting		175,743		547		176,290
Other		—		—		—
Total	$	629,463	$	5,170	$	634,633
Balance is presented net of accumulated impairment of $12.3 million at the pipeline and energy services segment, which occurred in prior periods. * Includes purchase price adjustments that were not material related to acquisitions in a prior period.

Other amortizable intangible assets were as follows:

	June 30, 2011			June 30, 2010			December 31, 2010
	(In thousands)
Customer relationships	$	21,702		$	24,942		$	24,942
Accumulated amortization		(9,395	)		(10,688	)		(11,625	)
		12,307			14,254			13,317
Noncompete agreements		7,685			9,405			9,405
Accumulated amortization		(5,062	)		(6,033	)		(6,425	)
		2,623			3,372			2,980
Other		12,899			12,063			13,217
Accumulated amortization		(4,492	)		(3,490	)		(4,243	)
		8,407			8,573			8,974
Total	$	23,337		$	26,199		$	25,271

Amortization expense for amortizable intangible assets for the three and six months ended June 30, 2011, was $1.0 million and $1.9 million, respectively. Amortization expense for amortizable intangible assets for the three and six months ended June 30, 2010, was $1.1 million and $2.1 million, respectively. Estimated amortization expense for amortizable intangible assets is $4.0 million in 2011, $3.9 million in 2012, $3.7 million in 2013, $3.4 million in 2014, $2.7 million in 2015 and $7.5 million thereafter.

12.	Derivative instruments

The Company's policy allows the use of derivative instruments as part of an overall energy price, foreign currency and interest rate risk management program to efficiently manage and minimize commodity price, foreign currency and interest rate risk. As of June 30, 2011, the Company had no outstanding foreign currency or interest rate hedges. The following information should be read in conjunction with Notes 1 and 7 in the Company's Notes to Consolidated Financial Statements in the 2010 Annual Report.

Cascade and Intermountain

At June 30, 2011, Cascade held natural gas swap agreements, with total forward notional volumes of 676,000 MMBtu, which were not designated as hedges. Cascade utilizes, and Intermountain periodically utilizes, natural gas swap agreements to manage a portion of their regulated natural gas supply portfolios in order to manage fluctuations in the price of natural gas related to core customers in accordance with authority granted by the IPUC, WUTC and OPUC. Core customers consist of residential, commercial and smaller industrial customers. The fair value of the derivative instrument must be estimated as of the end of each reporting period and is recorded on the Consolidated Balance Sheets as an asset or a liability. Periodic changes in the fair market value of the derivative instruments are recorded on the Consolidated Balance Sheets as a regulatory asset or a regulatory liability, and settlements of these arrangements are expected to be recovered through the purchased gas cost adjustment mechanism. Gains and losses on the settlements of these derivative instruments are recorded as a component of purchased natural gas sold on the Consolidated Statements of Income as they are recovered through the purchased gas cost adjustment mechanism. Under the terms of these arrangements, Cascade and Intermountain will either pay or receive settlement payments based on the difference between the fixed strike price and the monthly index price applicable to each contract. For the three and six months ended

June 30, 2011, Cascade recorded the change in the fair market value of the derivative instruments of $1.9 million and $8.5 million, respectively, as a decrease to regulatory assets. For the three and six months ended June 30, 2010, Cascade and Intermountain recorded the change in the fair market value of the derivative instruments of $3.9 million and $9.0 million, respectively, as a decrease to regulatory assets.

Certain of Cascade's derivative instruments contain credit-risk-related contingent features that permit the counterparties to require collateralization if Cascade's derivative liability positions exceed certain dollar thresholds. The dollar thresholds in certain of Cascade's agreements are determined and may fluctuate based on Cascade's credit rating on its debt. In addition, Cascade's derivative instruments contain cross-default provisions that state if the entity fails to make payment with respect to certain of its indebtedness, in excess of specified amounts, the counterparties could require early settlement or termination of such entity's derivative instruments in liability positions. The aggregate fair value of Cascade's derivative instruments with credit-risk-related contingent features that are in a liability position at June 30, 2011, was $900,000. The aggregate fair value of assets that would have been needed to settle the instruments immediately if the credit-risk-related contingent features were triggered on June 30, 2011, was $900,000.

Fidelity

At June 30, 2011, Fidelity held natural gas swap agreements with total forward notional volumes of 23.3 million MMBtu, natural gas basis swap agreements with total forward notional volumes of 12.9 million MMBtu, and oil swap, collar and put option agreements with total forward notional volumes of 3.7 million Bbl, all of which were designated as cash flow hedging instruments. At June 30, 2011, Fidelity held an oil call option agreement with total forward notional volumes of 184,000 Bbl, which did not qualify for hedge accounting. Fidelity utilizes these derivative instruments to manage a portion of the market risk associated with fluctuations in the price of natural gas and oil and basis differentials on its forecasted sales of natural gas and oil production.

The fair value of the derivative instruments must be estimated as of the end of each reporting period and is recorded on the Consolidated Balance Sheets as an asset or liability. Changes in the fair value attributable to the effective portion of hedging instruments, net of tax, are recorded in stockholders' equity as a component of accumulated other comprehensive income (loss). At the date the natural gas and oil quantities are settled, the amounts accumulated in other comprehensive income (loss) are reported in the Consolidated Statements of Income. To the extent that the hedges are not effective, the ineffective portion of the changes in fair market value is recorded directly in earnings. The proceeds received for natural gas and oil production are generally based on market prices.

The amount of hedge ineffectiveness was immaterial for the three and six months ended June 30, 2011, and 2010, and there were no components of the derivative instruments' gain or loss excluded from the assessment of hedge effectiveness. Gains and losses must be reclassified into earnings as a result of the discontinuance of cash flow hedges if it is probable that the original forecasted transactions will not occur. There were no such reclassifications into earnings as a result of the discontinuance of hedges. The gain on the derivative instrument that did not qualify for hedge accounting was reported in operating revenues on the Consolidated Statements of Income and was $1.9 million (before tax) and $179,000 (before tax) for the three and six months ended June 30, 2011, respectively.

Gains and losses on derivative instruments that are reclassified from accumulated other comprehensive income (loss) to current-period earnings are included in operating revenues on the Consolidated Statements of Income. For further information regarding the gains and losses on derivative instruments qualifying as cash flow hedges that were recognized in other comprehensive income (loss) and the gains and losses reclassified from accumulated other comprehensive income (loss) into earnings, see Note 8.

As of June 30, 2011, the maximum term of the derivative instruments, in which the exposure to the variability in future cash flows for forecasted transactions is being hedged, is 30 months. Based on June 30, 2011, fair values, over the next 12 months net losses of approximately $2.3 million (after tax) are estimated to be reclassified from accumulated other comprehensive income (loss) into earnings, subject to changes in natural gas and oil market prices, as the hedged transactions affect earnings.

Certain of Fidelity's derivative instruments contain cross-default provisions that state if Fidelity or any of its affiliates fails to make payment with respect to certain indebtedness, in excess of specified amounts, the counterparties could require early settlement or termination of derivative instruments in liability positions. The aggregate fair value of Fidelity's derivative instruments with credit-risk-related contingent features that are in a liability position at June 30, 2011, was $24.5 million. The aggregate fair value of assets that would have been needed to settle the instruments immediately if the credit-risk-related contingent features were triggered on June 30, 2011, was $24.5 million.

The location and fair value of all of the Company's derivative instruments in the Consolidated Balance Sheets were as follows:

Asset Derivatives	Location on Consolidated Balance Sheets	Fair Value at June 30, 2011		Fair Value at June 30, 2010		Fair Value at December 31, 2010
		(In thousands)
Designated as hedges	Commodity derivative instruments	$	14,040	$	24,932	$	15,123
	Other assets – noncurrent		6,265		8,524		4,104
			20,305		33,456		19,227
Not designated as hedges	Commodity derivative instruments		194		—		—
	Other assets – noncurrent		—		—		—
			194		—		—
Total asset derivatives		$	20,499	$	33,456	$	19,227

Liability Derivatives	Location on Consolidated Balance Sheets	Fair Value at June 30, 2011		Fair Value at June 30, 2010		Fair Value at December 31, 2010
		(In thousands)
Designated as hedges	Commodity derivative instruments	$	17,780	$	1,961	$	15,069
	Other liabilities – noncurrent		6,735		—		6,483
			24,515		1,961		21,552
Not designated as hedges	Commodity derivative instruments		906		18,199		9,359
	Other liabilities – noncurrent		—		698		—
			906		18,897		9,359
Total liability derivatives		$	25,421	$	20,858	$	30,911

13.	Fair value measurements

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 to satisfy its obligations under its unfunded, nonqualified 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 $40.3 million, $20.2 million and $39.5 million, as of June 30, 2011 and 2010, and December 31, 2010, respectively, are classified as Investments on the Consolidated Balance Sheets. The fair value of these investments decreased $1.3 million (before tax) for the three months ended June 30, 2011, and increased $790,000 (before tax) for the six months ended June 30, 2011. The decrease in the fair value of these investments for the three and six months ended June 30, 2010, was $1.8 million (before tax) and $970,000 (before tax), respectively. The change in fair value, which is considered part of the cost of the plan, is classified in operation and maintenance expense on the Consolidated Statements of Income.

The Company did not elect the fair value option for its remaining available-for-sale securities, which include auction rate securities, mortgage-backed securities and U.S. Treasury securities. These available-for-sale securities are recorded at fair value and are classified as Investments on the Consolidated Balance Sheets. The Company's auction rate securities, which totaled $11.4 million at June 30, 2011 and 2010, and December 31, 2010, approximate cost and, as a result, there are no accumulated unrealized gains or losses recorded in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets related to these investments. Unrealized gains or losses on mortgage-backed securities and U.S. Treasury securities are recorded in accumulated other comprehensive income (loss) as discussed in Note 8.

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 ASC establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs. The Company's assets and liabilities measured at fair value on a recurring basis are as follows:

	Fair Value Measurements at June 30, 2011, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at June 30, 2011
	(In thousands)
Assets:
Money market funds	$	—	$	8,297	$	—	$	8,297
Available-for-sale securities:
Insurance investment contract*		—		40,328		—		40,328
Auction rate securities		—		11,400		—		11,400
Mortgage-backed securities		—		8,162		—		8,162
U.S. Treasury securities		—		1,969		—		1,969
Commodity derivative instruments - current		—		14,234		—		14,234
Commodity derivative instruments - noncurrent		—		6,265		—		6,265
Total assets measured at fair value	$	—	$	90,655	$	—	$	90,655
Liabilities:
Commodity derivative instruments - current	$	—	$	18,686	$	—	$	18,686
Commodity derivative instruments - noncurrent		—		6,735		—		6,735
Total liabilities measured at fair value	$	—	$	25,421	$	—	$	25,421
* The insurance investment contract invests approximately 34 percent in common stock of mid-cap companies, 33 percent in common stock of small-cap companies, 32 percent in common stock of large-cap companies and 1 percent in cash and cash equivalents.

	Fair Value Measurements at June 30, 2010, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at June 30, 2010
	(In thousands)
Assets:
Money market funds	$	8,251	$	—	$	—	$	8,251
Available-for-sale securities:
Fixed-income securities		—		11,400		—		11,400
Insurance contract*		—		20,236		—		20,236
Commodity derivative instruments - current		—		24,932		—		24,932
Commodity derivative instruments - noncurrent		—		8,524		—		8,524
Total assets measured at fair value	$	8,251	$	65,092	$	—	$	73,343
Liabilities:
Commodity derivative instruments - current	$	—	$	20,160	$	—	$	20,160
Commodity derivative instruments - noncurrent		—		698		—		698
Total liabilities measured at fair value	$	—	$	20,858	$	—	$	20,858
* Invested in mutual funds.

	Fair Value Measurements at December 31, 2010, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2010
	(In thousands)
Assets:
Money market funds	$	—	$	166,620	$	—	$	166,620
Available-for-sale securities:
Fixed-income securities		—		11,400		—		11,400
Insurance investment contract*		—		39,541		—		39,541
Commodity derivative instruments – current		—		15,123		—		15,123
Commodity derivative instruments – noncurrent		—		4,104		—		4,104
Total assets measured at fair value	$	—	$	236,788	$	—	$	236,788
Liabilities:
Commodity derivative instruments – current	$	—	$	24,428	$	—	$	24,428
Commodity derivative instruments – noncurrent		—		6,483		—		6,483
Total liabilities measured at fair value	$	—	$	30,911	$	—	$	30,911
* The insurance investment contract invests approximately 35 percent in common stock of mid-cap companies, 33 percent in common stock of small-cap companies, 31 percent in common stock of large-cap companies and 1 percent in cash and cash equivalents.

The estimated fair value of the Company's Level 1 money market funds is determined using the market approach and is valued at the net asset value of shares held by the Company, based on published market quotations in active markets.

The estimated fair value of the Company's Level 2 money market funds and available-for-sale securities is determined using the market approach. The Level 2 money market funds consist of investments in short-term unsecured promissory notes and the value is based on comparable market transactions taking into consideration the credit quality of the issuer. The estimated fair value of the Company's Level 2 available-for-sale securities is based on comparable market transactions, other observable inputs or other sources, including pricing from outside sources such as the fund itself.

The estimated fair value of the Company's Level 2 commodity derivative instruments is based upon 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 nonperformance risk of the counterparties in addition to the Company's nonperformance risk is also evaluated.

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. For the three and six months ended June 30, 2011, there were no transfers between Levels 1 and 2.

The Company's long-term debt is not measured at fair value on the Consolidated Balance Sheets and the fair value is being provided for disclosure purposes only, and was based on

quoted market prices of the same or similar issues. The estimated fair value of the Company's long-term debt was as follows:

	Carrying Amount		Fair Value
	(In thousands)
Long-term debt at June 30, 2011	$	1,432,105	$	1,550,592
Long-term debt at June 30, 2010	$	1,581,265	$	1,718,477
Long-term debt at December 31, 2010	$	1,506,752	$	1,621,184

The carrying amounts of the Company's remaining financial instruments included in current assets and current liabilities approximate their fair values.

14.	Income taxes

In the first quarter of 2011, the Company received favorable resolution of certain tax matters relating to the 2004 through 2006 tax years. As a result, the Company recorded an income tax benefit from continuing operations of $4.2 million. This resolution includes the effects of $2.8 million related to the reversal of unrecognized tax benefits that were previously established for the 2004 through 2006 tax years and associated interest of $600,000.

In the second quarter of 2011, the Company's unrecognized tax positions increased $3.6 million, excluding interest, largely due to tax positions under examination relating to the 2007 through 2009 tax years. The ultimate deductibility of these tax positions is highly certain but there is uncertainty about the timing of such deductibility. The Company anticipates the uncertainty about the timing of the deductibility will be resolved within the next 12 months.

15.	Business segment data

The Company's reportable segments are those that are based on the Company's method of internal reporting, which generally segregates the strategic business units due to differences in products, services and regulation. The vast majority of the Company's operations are located within the United States. The Company also has investments in foreign countries, which largely consist of Centennial Resources' equity method investment in ECTE.

The electric segment generates, transmits and distributes electricity in Montana, North Dakota, South Dakota and Wyoming. The natural gas distribution segment distributes natural gas in those states as well as in Idaho, Minnesota, Oregon and Washington. These operations also supply related value-added services.

The construction services segment specializes in constructing and maintaining electric and communication lines, gas pipelines, fire suppression systems, and external lighting and traffic signalization equipment. This segment also provides utility excavation services and inside electrical wiring, cabling and mechanical services, sells and distributes electrical materials, and manufactures and distributes specialty equipment.

The pipeline and energy services segment provides natural gas transportation, underground storage and gathering services through regulated and nonregulated pipeline systems primarily in the Rocky Mountain and northern Great Plains regions of the United States. This segment also provides cathodic protection and other energy-related services.

The natural gas and oil production segment is engaged in natural gas and oil acquisition, exploration, development and production activities in the Rocky Mountain and Mid-Continent regions of the United States and in and around the Gulf of Mexico.

The construction materials and contracting segment mines aggregates and markets crushed stone, sand, gravel and related construction materials, including ready-mixed concrete, cement, asphalt, liquid asphalt and other value-added products. It also performs integrated contracting services. This segment operates in the central, southern and western United States and Alaska and Hawaii.

The Other category includes the activities of Centennial Capital, which insures various types of risks as a captive insurer for certain of the Company's subsidiaries. The function of the captive insurer is to fund the deductible layers of the insured companies' general liability and automobile liability coverages. Centennial Capital also owns certain real and personal property. The Other category also includes Centennial Resources' equity method investment in ECTE.

The information below follows the same accounting policies as described in Note 1 of the Company's Notes to Consolidated Financial Statements in the 2010 Annual Report. Information on the Company's businesses was as follows:

Three Months Ended June 30, 2011	External Operating Revenues		Inter- segment Operating Revenues			Earnings on Common Stock
	(In thousands)
Electric	$	49,986	$	—		$	4,807
Natural gas distribution		164,626		—			1,902
Pipeline and energy services		59,926		12,504			4,772
		274,538		12,504			11,481
Construction services		192,697		5,379			6,138
Natural gas and oil production		87,390		25,392			21,326
Construction materials and contracting		375,613		—			4,980
Other		519		2,301			971
		656,219		33,072			33,415
Intersegment eliminations		—		(45,576	)		—
Total	$	930,757	$	—		$	44,896

Three Months Ended June 30, 2010	External Operating Revenues		Inter- segment Operating Revenues			Earnings on Common Stock
	(In thousands)
Electric	$	45,683	$	—		$	4,947
Natural gas distribution		160,138		—			74
Pipeline and energy services		66,356		14,143			9,541
		272,177		14,143			14,562
Construction services		188,182		8			2,923
Natural gas and oil production		84,406		26,400			24,035
Construction materials and contracting		361,625		—			5,659
Other		54		2,213			1,588
		634,267		28,621			34,205
Intersegment eliminations		—		(42,764	)		—
Total	$	906,444	$	—		$	48,767

Six Months Ended June 30, 2011	External Operating Revenues		Inter- segment Operating Revenues			Earnings on Common Stock
	(In thousands)
Electric	$	107,831	$	—		$	13,331
Natural gas distribution		535,010		—			29,418
Pipeline and energy services		109,177		37,245			11,691
		752,018		37,245			54,440
Construction services		394,877		6,596			10,771
Natural gas and oil production		165,801		50,933			37,596
Construction materials and contracting		519,146		—			(16,423	)
Other		720		4,589			1,318
		1,080,544		62,118			33,262
Intersegment eliminations		—		(99,363	)		—
Total	$	1,832,562	$	—		$	87,702

Six Months Ended June 30, 2010	External Operating Revenues		Inter- segment Operating Revenues			Earnings on Common Stock
	(In thousands)
Electric	$	95,379	$	—		$	10,832
Natural gas distribution		509,162		—			23,416
Pipeline and energy services		127,881		41,228			18,332
		732,422		41,228			52,580
Construction services		341,247		32			3,051
Natural gas and oil production		156,066		62,327			46,246
Construction materials and contracting		511,432		—			(14,478	)
Other		54		4,451			2,968
		1,008,799		66,810			37,787
Intersegment eliminations		—		(108,038	)		—
Total	$	1,741,221	$	—		$	90,367

The Other category recognized a loss of $168,000 and income of $280,000, from discontinued operations, net of tax, for the three and six months ended June 30, 2011, respectively. Earnings from electric, natural gas distribution and pipeline and energy services are substantially all from regulated operations. Earnings from construction services, natural gas and oil production, construction materials and contracting, and other are all from nonregulated operations.

16.	Employee benefit plans

The Company has noncontributory defined benefit pension plans and other postretirement benefit plans for certain eligible employees. Components of net periodic benefit cost for the Company's pension and other postretirement benefit plans were as follows:

Three Months	Pension Benefits				Other Postretirement Benefits
Ended June 30,	2011		2010		2011	2010
	(In thousands)
Components of net periodic benefit cost:
Service cost	$	827	$	501