MDU Resources Group, Inc.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On October 31, 2024, MDU Resources Group, Inc. (“MDU Resources”, the “Company”, “we”, “our”, and “us”) entered into a Separation and Distribution Agreement (the “Separation and Distribution Agreement”) with Everus Construction Group, Inc. (“Everus”). The Separation was structured as a generally tax-free spin-off, whereby MDU Resources distributed all of the outstanding shares of Everus common stock on a pro rata basis to MDU Resources shareholders (the “Distribution”). The Distribution became effective at 11:59 p.m., Eastern Time, on October 31, 2024 (the “Separation Date”, the “Distribution Date”). On the Distribution Date, each holder of record as of the close of business on October 21, 2024, received one share of Everus common stock for every four shares of MDU Resources common stock held as of such time, subject to the payment of cash in lieu of fractional shares of Everus common stock. Everus Construction Group, Inc. is now an independent public company that trades under the symbol “ECG” on the New York Stock Exchange. After the Distribution, MDU Resources no longer consolidates Everus into its financial results (the entire transaction being referred to as the “Separation”).
The unaudited pro forma consolidated financial statements have been derived from the Company’s historical audited and unaudited consolidated financial statements and give effect to the Separation. The following unaudited pro forma consolidated statements of income for the six months ended June 30, 2024, and for each of the years ended December 31, 2023, 2022 and 2021 reflect the Company’s results as if the Separation had occurred as of January 1, 2021, to reflect the reclassification of Everus as discontinued operations for all periods presented. The unaudited pro forma consolidated balance sheet as of June 30, 2024, assumes that the Separation had occurred on June 30, 2024. Certain incremental transactions not related to the historical Everus business include the settlement of MDU Resources debt, the establishment of a transition services agreement between MDU Resources and Everus as well as certain transfers of assets and liabilities between MDU Resources and Everus, are presented as transaction accounting adjustments and give effect in the unaudited pro forma consolidated statements of income as if they had occurred on January 1, 2023. After the Separation Date, the historical financial results of Everus will be reflected in our consolidated financial statements as discontinued operations under U.S. generally accepted accounting principles (“GAAP”) for all periods.
The unaudited pro forma consolidated financial statements are based on the best available information, management estimates and the assumptions and adjustments described below and in the accompanying notes to those financial statements. They are not intended to be a complete presentation of the Company’s results of operations or financial position had the Separation occurred as of and for the periods indicated. In addition, the unaudited pro forma consolidated financial statements are provided for illustrative and informational purposes only and are not necessarily indicative of the Company’s future results of operations or financial position had the Separation been completed on the dates assumed. The actual results of operations and financial position may differ significantly from the amounts in the unaudited pro forma consolidated financial statements due to a variety of factors. Management believes these assumptions and adjustments are reasonable, given the information available at the filing date.
The unaudited pro forma consolidated financial statements and accompanying notes should be read in conjunction with:
•the historical audited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in MDU Resources’ Form 10-K for the year ended December 31, 2023;
•the historical unaudited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in MDU Resources’ Form 10-Q for the six months ended June 30, 2024; and
•the historical audited and unaudited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Everus' Information Statement, dated October 18, 2024, filed with the U.S. Securities and Exchange Commission ("SEC") as Exhibit 99.1 to Everus' Current Report on Form 8-K on October 18, 2024 (the
"Information Statement"). Certain reclassifications have been made to the historical presentation of Everus to conform to the presentation used by MDU Resources.
The ”As Reported” column in the unaudited pro forma consolidated financial statements reflects MDU Resources’ historical audited and unaudited financial statements for the periods presented and does not reflect any adjustments related to the Separation and related events.
The adjustments included within the “Everus Separation” column of the unaudited pro forma consolidated financial statements are consistent with the guidance for discontinued operations, ASC 205-20, Presentation of Financial Statements – Discontinued Operations (“ASC 205”), under GAAP. This information was derived from our historical audited and unaudited consolidated financial statements and accounting records for the six months ended June 30, 2024, and for each of the three fiscal years ended December 31, 2023, 2022 and 2021 . The Company’s current estimates on a discontinued operations basis are preliminary and could change as the Company finalizes discontinued operations accounting to be reported in the Company’s Annual Report on Form 10-K for the year ending December 31, 2024.
The unaudited pro forma consolidated financial statements have been prepared in accordance with GAAP and in accordance with Regulation S-X Article 11, Pro Forma Financial Information. The unaudited pro forma consolidated financial statements do not include adjustments to reflect any potential synergies or dis-synergies that may result from the Separation.
MDU Resources Group, Inc.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Six Months Ended June 30, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| As Reported | | Everus Separation (A) | | Transaction Accounting Adjustments | | Pro Forma |
| (In thousands, except per share amounts) |
| Operating revenues: | | | | | | | | |
| Electric, natural gas distribution and regulated pipeline | $ | 926,561 | | | $ | — | | | $ | — | | | | $ | 926,561 | |
| Non-regulated pipeline, construction services and other | 1,334,809 | | | (1,328,624) | | | 102 | | (C) | | 6,287 | |
| Total operating revenues | 2,261,370 | | | (1,328,624) | | | 102 | | | | 932,848 | |
| Operating expenses: | | | | | | | | |
| Operation and maintenance | | | | | | | | |
| Electric, natural gas distribution and regulated pipeline | 206,389 | | | — | | | — | | | | 206,389 | |
| Non-regulated pipeline, construction services and other | 1,198,521 | | | (1,183,258) | | | 906 | | (C), (D), (I) | | 16,169 | |
| Total operation and maintenance | 1,404,910 | | | (1,183,258) | | | 906 | | | | 222,558 | |
| Purchased natural gas sold | 353,192 | | | — | | | — | | | | 353,192 | |
| Electric fuel and purchased power | 62,333 | | | — | | | — | | | | 62,333 | |
| Depreciation and amortization | 111,631 | | | (12,175) | | | — | | | | 99,456 | |
| Taxes, other than income | 103,611 | | | (43,728) | | | — | | | | 59,883 | |
| Total operating expenses | 2,035,677 | | | (1,239,161) | | | 906 | | | | 797,422 | |
| Operating income | 225,693 | | | (89,463) | | | (804) | | | | 135,426 | |
| Other income | 28,449 | | | (6,176) | | | 2,832 | | (I) | | 25,105 | |
| Interest expense | 57,314 | | | (4,393) | | | (2,151) | | (F) | | 50,770 | |
| Income before income taxes | 196,828 | | | (91,246) | | | 4,179 | | | | 109,761 | |
| Income taxes | 35,356 | | | (24,841) | | | 1,020 | | (J) | | 11,535 | |
Income from continuing operations | $ | 161,472 | | | $ | (66,405) | | | $ | 3,159 | | | | $ | 98,226 | |
| | | | | | | | |
| Earnings per share - basic | | | | | | | | |
| Income from continuing operations | $ | 0.79 | | | | | | | | $ | 0.48 | |
| Earnings per share - diluted | | | | | | | | |
| Income from continuing operations | $ | 0.79 | | | | | | | | $ | 0.48 | |
| Weighted-average common shares outstanding - basic | 203,834 | | | | | | | | 203,834 | |
| Weighted-average common shares outstanding - diluted | 204,364 | | | | | | | | 204,364 | |
See accompanying notes to unaudited pro forma consolidated financial statements
MDU Resources Group, Inc.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 2023
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| As Reported | | Everus Separation (A) | | Transaction Accounting Adjustments | | Pro Forma |
| (In thousands, except per share amounts) |
| Operating revenues: | | | | | | | | |
| Electric, natural gas distribution and regulated pipeline | $ | 1,789,637 | | | $ | — | | | $ | — | | | | $ | 1,789,637 | |
| Non-regulated pipeline, construction services and other | 2,867,703 | | | (2,853,988) | | | 258 | | (C) | | 13,973 | |
| Total operating revenues | 4,657,340 | | | (2,853,988) | | | 258 | | | | 1,803,610 | |
| Operating expenses: | | | | | | | | |
| Operation and maintenance | | | | | | | | |
| Electric, natural gas distribution and regulated pipeline | 397,037 | | | — | | | — | | | | 397,037 | |
| Non-regulated pipeline, construction services and other | 2,573,835 | | | (2,536,893) | | | 341 | | (C), (I) | | 37,283 | |
| Total operation and maintenance | 2,970,872 | | | (2,536,893) | | | 341 | | | | 434,320 | |
| Purchased natural gas sold | 742,965 | | | — | | | — | | | | 742,965 | |
| Electric fuel and purchased power | 107,881 | | | — | | | — | | | | 107,881 | |
| Depreciation and amortization | 213,598 | | | (23,148) | | | — | | | | 190,450 | |
| Taxes, other than income | 196,046 | | | (92,912) | | | — | | | | 103,134 | |
| Total operating expenses | 4,231,362 | | | (2,652,953) | | | 341 | | | | 1,578,750 | |
| Operating income | 425,978 | | | (201,035) | | | (83) | | | | 224,860 | |
| Realized gain on tax-free exchange of the retained shares in Knife River | 186,556 | | | — | | | — | | | | 186,556 | |
| Other income | 41,672 | | | (8,218) | | | 5,916 | | (I) | | 39,370 | |
| Interest expense | 114,308 | | | (9,684) | | | (4,079) | | (F) | | 100,545 | |
| Income before income taxes | 539,898 | | | (199,569) | | | 9,912 | | | | 350,241 | |
| Income taxes | 59,473 | | | (49,261) | | | 2,419 | | (J) | | 12,631 | |
Income from continuing operations | $ | 480,425 | | | $ | (150,308) | | | $ | 7,493 | | | | $ | 337,610 | |
| | | | | | | | |
| Earnings per share - basic | | | | | | | | |
| Income from continuing operations | $ | 2.36 | | | | | | | | $ | 1.66 | |
| Earnings per share - diluted | | | | | | | | |
| Income from continuing operations | $ | 2.36 | | | | | | | | $ | 1.66 | |
| Weighted-average common shares outstanding - basic | 203,640 | | | | | | | | 203,640 | |
| Weighted-average common shares outstanding - diluted | 203,938 | | | | | | | | 203,938 | |
See accompanying notes to unaudited pro forma consolidated financial statements
MDU Resources Group, Inc.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 2022
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| As Reported | | Everus Separation (A) | | Transaction Accounting Adjustments | | Pro Forma |
| (In thousands, except per share amounts) |
| Operating revenues: | | | | | | | | |
| Electric, natural gas distribution and regulated pipeline | $ | 1,736,397 | | | $ | — | | | $ | — | | | | $ | 1,736,397 | |
| Non-regulated pipeline, construction services and other | 2,705,387 | | | (2,694,486) | | | 136 | | (C) | | 11,037 | |
| Total operating revenues | 4,441,784 | | | (2,694,486) | | | 136 | | | | 1,747,434 | |
| Operating expenses: | | | | | | | | |
| Operation and maintenance | | | | | | | | |
| Electric, natural gas distribution and regulated pipeline | 375,347 | | | — | | | — | | | | 375,347 | |
| Non-regulated pipeline, construction services and other | 2,450,347 | | | (2,418,345) | | | 4,628 | | (C) | | 36,630 | |
| Total operation and maintenance | 2,825,694 | | | (2,418,345) | | | 4,628 | | | | 411,977 | |
| Purchased natural gas sold | 757,883 | | | — | | | — | | | | 757,883 | |
| Electric fuel and purchased power | 92,007 | | | — | | | — | | | | 92,007 | |
| Depreciation and amortization | 210,028 | | | (21,469) | | | — | | | | 188,559 | |
| Taxes, other than income | 186,173 | | | (85,543) | | | — | | | | 100,630 | |
| Total operating expenses | 4,071,785 | | | (2,525,357) | | | 4,628 | | | | 1,551,056 | |
| Operating income | 369,999 | | | (169,129) | | | (4,492) | | | | 196,378 | |
| Other income | 11,228 | | | (7,967) | | | — | | | | 3,261 | |
| Interest expense | 80,698 | | | (15) | | | — | | | | 80,683 | |
| Income before income taxes | 300,529 | | | (177,081) | | | (4,492) | | | | 118,956 | |
| Income taxes | 49,761 | | | (43,565) | | | (1,094) | | (J) | | 5,102 | |
Income from continuing operations | 250,768 | | | (133,516) | | | (3,398) | | | | 113,854 | |
| | | | | | | | |
| Earnings per share - basic | | | | | | | | |
| Income from continuing operations | $ | 1.23 | | | | | | | | $ | 0.56 | |
| Earnings per share - diluted | | | | | | | | |
| Income from continuing operations | $ | 1.23 | | | | | | | | $ | 0.56 | |
| Weighted-average common shares outstanding - basic | 203,358 | | | | | | | | 203,358 | |
| Weighted-average common shares outstanding - diluted | 203,462 | | | | | | | | 203,462 | |
See accompanying notes to unaudited pro forma consolidated financial statements
MDU Resources Group, Inc.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 2021
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| As Reported | | Everus Separation (A) | | Transaction Accounting Adjustments | | Pro Forma |
| (In thousands, except per share amounts) |
| Operating revenues: | | | | | | | | |
| Electric, natural gas distribution and regulated pipeline | $ | 1,390,992 | | | $ | — | | | $ | — | | | | $ | 1,390,992 | |
| Non-regulated pipeline, construction services and other | 2,063,444 | | | (2,050,036) | | | 198 | | (C) | | 13,606 | |
| Total operating revenues | 3,454,436 | | | (2,050,036) | | | 198 | | | | 1,404,598 | |
| Operating expenses: | | | | | | | | |
| Operation and maintenance | | | | | | | | |
| Electric, natural gas distribution and regulated pipeline | 367,234 | | | — | | | — | | | | 367,234 | |
| Non-regulated pipeline, construction services and other | 1,842,697 | | | (1,811,723) | | | 1,402 | | (C) | | 32,376 | |
| Total operation and maintenance | 2,209,931 | | | (1,811,723) | | | 1,402 | | | | 399,610 | |
| Purchased natural gas sold | 483,118 | | | — | | | — | | | | 483,118 | |
| Electric fuel and purchased power | 74,105 | | | — | | | — | | | | 74,105 | |
| Depreciation and amortization | 198,240 | | | (20,270) | | | — | | | | 177,970 | |
| Taxes, other than income | 157,991 | | | (67,061) | | | — | | | | 90,930 | |
| Total operating expenses | 3,123,385 | | | (1,899,054) | | | 1,402 | | | | 1,225,733 | |
| Operating income | 331,051 | | | (150,982) | | | (1,204) | | | | 178,865 | |
| Other income | 25,724 | | | (2,531) | | | — | | | | 23,193 | |
| Interest expense | 70,709 | | | (42) | | | — | | | | 70,667 | |
| Income before income taxes | 286,066 | | | (153,471) | | | (1,204) | | | | 131,391 | |
| Income taxes | 43,544 | | | (37,611) | | | (292) | | (J) | | 5,641 | |
Income from continuing operations | 242,522 | | | (115,860) | | | (912) | | | | 125,750 | |
| | | | | | | | |
| Earnings per share - basic | | | | | | | | |
| Income from continuing operations | $ | 1.20 | | | | | | | | $ | 0.62 | |
| Earnings per share - diluted | | | | | | | | |
| Income from continuing operations | $ | 1.20 | | | | | | | | $ | 0.62 | |
| Weighted-average common shares outstanding - basic | 202,076 | | | | | | | | 202,076 | |
| Weighted-average common shares outstanding - diluted | 202,383 | | | | | | | | 202,383 | |
See accompanying notes to unaudited pro forma consolidated financial statements
MDU Resources Group, Inc.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of June 30, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| As Reported | | Everus Separation (A) | | Transaction Accounting Adjustments | | Pro Forma |
| (In thousands, except per share amounts) |
| Assets: | | | | | | | | |
| Current assets: | | | | | | | | |
| Cash, cash equivalents and restricted cash | $ | 94,438 | | | $ | (15,658) | | | $ | 98,125 | | (E), (G), (H) | | $ | 176,905 | |
| Receivables, net | 926,804 | | | (780,853) | | | 15,815 | | (B) | | 161,766 | |
| Inventories | 217,822 | | | (48,575) | | | — | | | | 169,247 | |
| Current regulatory assets | 69,736 | | | — | | | — | | | | 69,736 | |
| Prepayments and other current assets | 88,239 | | | (14,821) | | | — | | | | 73,418 | |
| Total current assets | $ | 1,397,039 | | | $ | (859,907) | | | $ | 113,940 | | | | $ | 651,072 | |
| Noncurrent assets: | | | | | | | | |
| Property, plant and equipment | 7,560,455 | | | (269,785) | | | — | | | | 7,290,670 | |
| Less: accumulated depreciation and amortization | 2,295,499 | | | (151,498) | | | — | | | | 2,144,001 | |
| Net property, plant and equipment | 5,264,956 | | | (118,287) | | | — | | | | 5,146,669 | |
| Goodwill | 488,960 | | | (143,224) | | | — | | | | 345,736 | |
| Other intangible assets, net | 960 | | | (960) | | | — | | | | — | |
| Regulatory assets | 351,334 | | | — | | | — | | | | 351,334 | |
| Investments | 123,391 | | | (13,421) | | | — | | | | 109,970 | |
| Operating lease right-of-use assets | 83,189 | | | (61,694) | | | — | | | | 21,495 | |
| Other | 250,507 | | | (29,035) | | | — | | | | 221,472 | |
| Total noncurrent assets | 6,563,297 | | | (366,621) | | | — | | | | 6,196,676 | |
| Total assets | $ | 7,960,336 | | | $ | (1,226,528) | | | $ | 113,940 | | | | $ | 6,847,748 | |
| Liabilities and stockholders' equity: | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Long-term debt due within one year | 193,608 | | | (132,000) | | | (56,908) | | (E) | | 4,700 | |
| Accounts payable | 442,568 | | | (343,089) | | | 6,852 | | (B), (E) | | 106,331 | |
| Taxes payable | 63,029 | | | (10,828) | | | — | | | | 52,201 | |
| Dividends payable | 25,029 | | | — | | | — | | | | 25,029 | |
| Accrued compensation | 63,927 | | | (45,309) | | | — | | | | 18,618 | |
| Operating lease liabilities due within one year | 24,597 | | | (22,693) | | | — | | | | 1,904 | |
| Regulatory liabilities due within one year | 158,535 | | | — | | | — | | | | 158,535 | |
| Other accrued liabilities | 178,566 | | | (55,913) | | | 50,596 | | (B), (D), (H) | | 173,249 | |
| Total current liabilities | 1,149,859 | | | (609,832) | | | 540 | | | | 540,567 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Noncurrent liabilities: | | | | | | | | |
| Long-term debt | 2,207,009 | | | — | | | — | | | | 2,207,009 | |
| Deferred income taxes | 454,826 | | | (4,612) | | | — | | | | 450,214 | |
| Asset retirement obligations | 393,743 | | | — | | | — | | | | 393,743 | |
| Regulatory liabilities | 461,366 | | | — | | | — | | | | 461,366 | |
| Operating lease liabilities | 58,826 | | | (39,480) | | | — | | | | 19,346 | |
| Other | 216,903 | | | (12,654) | | | 2,943 | | (B) | | 207,192 | |
| Total noncurrent liabilities | 3,792,673 | | | (56,746) | | | 2,943 | | | | 3,738,870 | |
| Total liabilities | 4,942,532 | | | (666,578) | | | 3,483 | | | | 4,279,437 | |
| Commitments and contingencies | | | | | | | | |
| Stockholders' equity: | | | | | | | | |
Common stock Authorized - 500,000,000 shares, $1.00 par value Shares issued - 203,888,237 at June 30, 2024 | 203,888 | | | — | | | — | | | | 203,888 | |
| Other paid-in capital | 1,468,483 | | | — | | | — | |
| | 1,468,483 | |
| Retained earnings | 1,363,604 | | | (560,920) | | | 110,457 | | (B), (D), (E), (G) | | 913,141 | |
| Accumulated other comprehensive loss | (18,171) | | | 970 | | | — | | | | (17,201) | |
| Total stockholders' equity | 3,017,804 | | | (559,950) | | | 110,457 | | | | 2,568,311 | |
| Total liabilities and stockholders' equity | $ | 7,960,336 | | | $ | (1,226,528) | | | $ | 113,940 | | | | $ | 6,847,748 | |
See accompanying notes to unaudited pro forma consolidated financial statements
MDU Resources Group, Inc.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Everus Separation:
(A) Reflects the discontinued operations, including associated assets, liabilities, equity and results of operations attributable to Everus which were included in the Company’s historical audited and unaudited consolidated financial statements. In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, the amounts exclude the following:
1. General corporate overhead costs which were historically allocated to Everus that do not meet the requirements to be presented in discontinued operations. Such allocations include, but are not limited to, senior management, legal, human resources, finance and accounting, treasury, information technology, internal audit, insurance and other shared services related to MDU Resources’ corporate functions that historically provided support to Everus.
2. The impact of intercompany activity between MDU Resources and Everus, including intercompany purchases and sales and intercompany receivables and payables that were eliminated in consolidation.
Transaction Accounting Adjustments:
(B) Reflects the presentation of third-party receivable and payable balances between MDU Resources and Everus that were historically recorded as intercompany transactions and eliminated in consolidation on the unaudited pro forma consolidated balance sheet as of June 30, 2024, as follows:
| | | | | |
| As of June 30, 2024 |
| (In thousands) |
| Receivables, net | $ | 15,815 | |
| Accounts payable | $ | 7,894 | |
| Other accrued liabilities | $ | 4,932 | |
| Other noncurrent liabilities | $ | 2,943 | |
| Retained earnings | $ | 46 | |
(C) Reflects the presentation of third-party revenues related to services provided from MDU Resources to Everus and expenses for MDU Resources related to services received from Everus which were historically recorded as intercompany transactions and eliminated in consolidation. This adjustment reflects incremental operating revenues in Non-regulated pipeline, construction services and other of $102 thousand, $258 thousand, $136 thousand and $198 thousand for the six months ended June 30, 2024 and for the years ended December 31, 2023, 2022 and 2021, respectively, as well as incremental operating expenses in Non-regulated pipeline, construction services and other of $336 thousand, $140 thousand, $4,628 thousand and $1,402 thousand for the six months ended June 30, 2024, and for the years ended December 31, 2023, 2022 and 2021, respectively.
(D) Subsequent to June 30, 2024, MDU Resources anticipates that it will incur additional non-recurring costs of approximately $47,775 thousand to complete the Separation. These expenses primarily relate to financial, legal and tax costs and are reflected as an accrual to Other accrued liabilities on the unaudited pro forma consolidated balance sheet as of June 30, 2024, with the offsetting balance recorded to Retained earnings. $553 thousand of these costs are anticipated to be related to continuing operations. As such, they have been added to operating expenses in Non-regulated pipeline, construction services and other for the six months ended June 30, 2024. The remaining $47,222 thousand of the costs expected to be incurred after June 30, 2024, will be recorded as a component of discontinued operations following the Separation. Therefore, the unaudited consolidated statement of income is not adjusted to include this amount.
(E) Reflects the transfer of $290,000 thousand of Cash, cash equivalents and restricted cash from Everus to MDU Resources. The offset of this transfer is recorded in Retained earnings. Everus funded the transfer using third-party debt obtained on October 31, 2024, as part of the Separation. MDU Resources estimates that $191,042 thousand of the cash received will be used to retire third-party debt obligations in Long-term debt due within one year of $188,908 thousand, consisting of $190,000 thousand of debt, net of unamortized debt issuance costs of $1,092 thousand, and $1,042 thousand of accrued interest within Accounts payable. The increase to Cash, cash equivalents and restricted cash of $98,958 thousand represents excess cash expected to be retained by MDU Resources following the settlement of its third-party debt, and will be used in the future to pay dividends to MDU Resources shareholders. $132,000 thousand of the third-party debt obligations retired are included as a component of discontinued operations related to Everus, and are shown in the Everus Separation column on the unaudited pro forma consolidated balance sheet.
(F) In connection with the cash settlement of third-party debt by MDU Resources described in adjustment E above, Interest expense associated with the obligations was also removed from the historical results of MDU Resources. Associated Interest expense consisted of $6,544 thousand and $13,763 thousand for the six months ended June 30, 2024, and for the year ended December 31, 2023, respectively. $4,393 thousand and $9,684 thousand of the historical interest expense removed is included as a component of discontinued operations related to Everus, and is shown in the Everus Separation column on the unaudited pro forma consolidated statement of income.
(G) Reflects a one-time estimated contribution from Everus to a trust account whose ownership will be maintained by MDU Resources of $1,278 thousand increasing Cash, cash equivalents and restricted cash and Retained earnings as of June 30, 2024. The amount represents a payment by Everus to finance the underfunding of the benefit obligations associated with MDU Resources’ Supplemental Income Security Plan (“SISP”), a plan in which certain Everus employees participated. MDU Resources will retain the SISP liability associated with historical Everus participants.
(H) Reflects the transfer of $2,111 thousand of Cash, cash equivalents and restricted cash from MDU Resources to Everus and the settlement of a payable held in Other accrued liabilities as of June 30, 2024. The amount owed by MDU Resources to Everus, which was historically intercompany in nature, was established as a third-party balance as part of adjustment B above. MDU Resources holds cash deposits from its subsidiaries for use of certain corporate assets. As part of the Separation, MDU Resources will return the cash deposit and settle the associated payable established with Everus.
(I) In connection with the Separation, MDU Resources and Everus entered into a transition services agreement whereby each party will provide certain post-Separation services on a transitional basis for a period of up to 20 months. As such, this adjustment reflects the impact of the transition services agreement, which includes services related to tax, legal, treasury, human resources, information technology, risk management and other general and administrative function costs. MDU Resources will provide services to Everus of $2,832 thousand and $5,916 thousand, resulting in Other income recognized for the six months ended June 30, 2024 and the year ended December 31, 2023, respectively. Everus will provide services to MDU Resources of $17 thousand and $201 thousand, resulting in incremental operating expenses in Non-regulated pipeline, construction services and other for the six months ended June 30, 2024, and the year ended December 31, 2023, respectively.
(J) Reflects the estimated income tax impact of the transaction accounting adjustments. For all periods, the adjustment was calculated by applying the statutory income tax rate to each of the pre-tax pro forma adjustments, resulting in an increase of Income taxes of $1,020 thousand and $2,419 thousand for the six months ended June 30, 2024 and the year ended December 31, 2023, respectively, and a reduction of Income taxes of $1,094 thousand and $292 thousand for the years ended December 31, 2022 and 2021, respectively.
