UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _____________
Commission file number 1-3480
MDU RESOURCES GROUP, INC.
401(k) RETIREMENT PLAN
(Full title of the plan)
MDU RESOURCES GROUP, INC.
(Name of issuer of securities held pursuant to the plan)
MDU RESOURCES GROUP, INC.
SCHUCHART BUILDING
918 EAST DIVIDE AVENUE
P.O. BOX 5650
BISMARCK, NORTH DAKOTA 58506-5650
(Address of the plan and address of the issuer's principal
executive offices)
CONTENTS
Required Information
Financial Statements:
Statements of Net Assets Available for Benefits
-- December 31, 2003 and 2002
Statement of Changes in Net Assets Available for
Benefits -- Year ended December 31, 2003
Notes to Financial Statements
Supplemental Schedules:
Schedule H, Line 4a - Schedule of Delinquent Participant
Contributions - Year Ended December 31, 2003
Schedule H, Line 4i - Schedule of Assets (Held at
End of Year)
Report of Independent Registered Public Accounting Firm
Signature
Exhibit:
Consent of Independent Registered Public Accounting Firm
MDU RESOURCES GROUP, INC.
401(k) RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
2003 2002
Assets:
Investments (Notes 3 and 5) $287,139,748 $203,125,630
Cash and cash equivalents
(Note 4) 3,060,837 1,833,636
290,200,585 204,959,266
Receivables:
Employer contributions 3,213,772 2,411,697
Participant contributions 398,986 84,239
Dividends 1,408,044 1,338,641
Other 197,534 ---
Net assets available for benefits $295,418,921 $208,793,843
The accompanying notes are an integral part
of these financial statements.
MDU RESOURCES GROUP, INC.
401(k) RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2003
Additions to Net Assets
Attributed to:
Investment income:
Dividends $ 5,465,455
Interest 875,178
Net appreciation in fair value
of investments (Note 3) 68,115,075
74,455,708
Contributions:
Employers 8,190,570
Employees 15,123,443
Employee rollover 2,146,216
25,460,229
Total additions 99,915,937
Deductions from Net Assets
Attributed to:
Distributions to terminated
participants 13,494,078
Administrative expenses 81,752
Total deductions 13,575,830
Net increase in net assets
available for benefits before
plan merger 86,340,107
Transfer of assets due to plan
merger (Note 6) 284,971
Net assets available for
benefits at
beginning of year 208,793,843
Net assets available for
benefits at end of year $295,418,921
The accompanying notes are an integral part
of this financial statement.
MDU RESOURCES GROUP, INC.
401(k) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
1. Description of the Plan
The following description of the MDU Resources Group, Inc. 401(k)
Retirement Plan (the Plan) provides only general information.
Participants should refer to the plan document for a more
complete description of the Plan's provisions.
General --
The Plan, formerly the MDU Resources Group, Inc. Tax Deferred
Compensation Savings Plan, was initially adopted by the Board of
Directors of MDU Resources Group, Inc. (the Company) on August 4,
1983, to be effective January 1, 1984. The Plan is a defined
contribution plan. On January 1, 1999, the name was changed and
the Plan was amended to reflect the merger of the MDU Resources
Group, Inc. Tax Deferred Compensation Savings Plan for Collective
Bargaining Unit Employees (the Bargaining Plan) into the Plan.
Each participant in the Bargaining Plan automatically became a
participant in the Plan. The merger and the transfer of assets
were effectuated in accordance with Sections 401(a)(12),
411(d)(6) and 414(l) of the Internal Revenue Code of 1986, as
amended (the Code), and the regulations thereunder.
The Company and any of its direct or indirect subsidiaries that
participate in the Plan are the Employers (the Employers). The
fiscal year of the Plan is the calendar year. The Plan is
subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended.
The Board of Directors of the Company may, at any time, amend,
modify or terminate the Plan, and the Boards of Directors of the
Employers may, at any time, terminate participation in the Plan
with respect to the respective Employer. The Company has
delegated to the Employee Benefits Administrative Committee (the
Committee) the authority to amend or modify the Plan; however,
certain amendments identified in the plan document are subject to
approval by the Board of Directors of the Company.
The Committee is the plan administrator. The Committee consists
of those individuals serving from time to time in the position of
or related position of the following: Chief Administrative
Officer of the Company, Chief Financial Officer of the Company,
Vice President - Human Resources of the Company, and any number
of other individuals appointed by the Chief Executive Officer of
the Company who are employed by the Company or an Affiliate of
the Company. The recordkeeper and trustee of the Plan are New
York Life Investment Management LLC (the Recordkeeper) and New
York Life Trust Company (the Trustee), respectively.
The Plan contains three parts: (1) The Deferred Savings feature,
which allows an eligible employee to elect a pre-tax deferral of
a portion of current compensation into a tax-exempt trust and
allows Employers to provide for employer matching contributions
(standard and effective January 1, 2003 prevailing wage law
qualified) based on the amount of the eligible employee's pre-tax
deferral contribution, (2) The MDU Resources Group, Inc. Employee
Stock Ownership Plan (ESOP) feature, which is the part of the
Plan related to participation in the ESOP, and (3) The Profit
Sharing/Special Contribution feature, which allows the Employers
to make discretionary contributions to the individual accounts of
eligible employees, based on attainment of pre-determined
earnings levels, and nondiscretionary contributions based on
compensation of eligible employees.
Deferred Savings
Eligibility --
Generally, employees may participate in the Plan upon hire if
they are at least 18 years of age and regular full-time or part-
time employees. Effective January 1, 2003, certain employees who
perform services for an Employer under a public contract that is
subject to the Davis-Bacon Act or similar prevailing state wage
law and who otherwise meet the Plan's eligibility requirements
may participate in the Plan.
Contributions --
The Plan allows participants who are highly compensated employees
to elect pre-tax deferral contributions varying from one percent
through 22 percent and participants who are not highly
compensated employees to elect pre-tax deferral contributions
varying from one percent to 50 percent, in one percent
increments, of eligible compensation for each pay period, up to a
maximum pre-tax deferral contribution of $12,000 for the 2003
Plan year. The Plan also allows participants who are eligible to
make pre-tax deferral contributions and will have attained age 50
before the close of the Plan year to make catch-up elective
deferrals of up to $2,000 for 2003. All participant
contributions are credited to the participant's Savings
Contribution Account. In addition, the Plan accepts rollover
contributions from an eligible retirement plan or an individual
retirement account that holds only assets distributed from a
qualified plan. Such savings contributions on behalf of a
participant are credited to the participant's Rollover Account.
Rollover contributions may not include after-tax employee
contributions.
An election is made by each participant to allocate contributions
in one percent increments to any or all of the following
13 currently available investment options:
- MDU Resources Group, Inc. Common Stock Fund (MDU Resources
Stock Fund)
- New York Life Insurance Anchor Account - Stable Value Option
- American Funds - EuroPacific Growth Fund - International
Growth Mutual Fund
- American Funds - The Growth Fund of America - Growth Mutual
Fund
- Baron Asset Fund - Growth Mutual Fund
- Davis New York Venture Fund - Growth Mutual Fund
- Dodge & Cox Balanced Fund - Growth and Income Mutual Fund
- MainStay Indexed Bond Fund - Income Mutual Fund
- MainStay S&P 500 Index Fund - Growth and Income Mutual Fund
- MainStay Small Cap Opportunity Fund - Growth Mutual Fund
- Royce Total Return Fund - Small-Cap Value Fund
- RS Emerging Growth Fund - Growth Mutual Fund
- Templeton Foreign Fund - International Equity Mutual Fund
Prior to January 1, 2004, the MainStay Indexed Bond Fund,
MainStay S&P 500 Index Fund and the MainStay Small Cap
Opportunity Fund were known as the Eclipse Indexed Bond Fund,
Eclipse Indexed Equity Fund and the Eclipse Small Cap Value Fund,
respectively.
Employer Contributions --
Each participant's Employer may elect to provide a standard
matching contribution, equal to a percentage of such
participant's monthly pre-tax deferral contributions up to a
specified percent of the participant's compensation as provided
under the Plan or as adopted by the Employer and approved by the
Committee. In addition, the participant's Employer may make an
additional discretionary variable matching contribution based on
the Employer's attainment of pre-determined earnings levels.
Standard matching contributions and variable matching
contributions are credited to such participant's Matching
Contribution Account. All matching contributions are initially
invested in the MDU Resources Stock Fund of the Company but can
be transferred, at the participant's discretion, to other
investment options.
The Employers remit all authorized contributions made by the
participants to the Trustee to be held in trust and invested for
the respective accounts of the participants, pursuant to the
terms of a trust agreement effective January 1, 1998, as amended.
Contributions to the MDU Resources Stock Fund, including the
Employers' matching contributions, are used by the Trustee to
purchase shares of MDU Resources Group, Inc. common stock
directly on the open market. All such market purchases may be
made at such prices as the Trustee may determine in its sole and
absolute discretion. The Trustee may also purchase shares of
authorized but unissued common stock directly from the Company if
the Company chooses to issue new stock.
Vesting --
A participant's interest in a Savings Contribution Account,
Rollover Account or a Matching Contribution Account is at all
times fully vested and nonforfeitable. Participant accounts are
valued on a daily basis.
Distributions and Withdrawals --
The amount credited to a participant's Savings Contribution
Account, Rollover Account and Matching Contribution Account shall
become payable to the participant or the participant's
beneficiary/beneficiaries, as applicable, upon death, retirement,
disability, or other termination of employment with the
Employers. The distribution of such amounts will be in
accordance with the Plan, based on the method of payment elected
by the participant or designated beneficiary/beneficiaries. The
Plan only allows single-sum distributions. Distributions with
respect to investment options other than the MDU Resources Stock
Fund are in the form of cash. Distributions with respect to the
MDU Resources Stock Fund are in the form of stock certificates,
except for distributions of fractional shares which are in the
form of cash.
A participant may make in-service withdrawals (hardship or age 59
1/2) from such participant's Savings Contribution Account or
Matching Contribution Account under certain conditions.
Participant Loans --
A participant may be eligible to obtain a loan from the Plan.
The maximum amount available for a loan is the lesser of $50,000
or one-half of the participant's vested account balance, subject
to certain limitations. Loans must be repaid over specified
periods through payroll deduction and bear interest at a
commercially reasonable rate in effect at the time the loan is
made, as determined by the Committee.
ESOP
Eligibility --
Participation in the ESOP feature of the Plan is limited to
participants in the ESOP as of January 1, 1987 (1987 Effective
Date) or the date as of which an ESOP Account was established
under the Plan, whichever is later.
Contributions --
As of the 1987 Effective Date, ESOP Accounts have been suspended
and no additional contributions shall be made by the Company or
participants to such accounts, other than to reflect dividends or
other earnings.
Vesting --
A participant's interest in an ESOP Account is at all times fully
vested and nonforfeitable.
Distributions --
Distributions are consistent with the Deferred Savings feature
previously mentioned, except for participant loans, which are not
available to ESOP Accounts.
Each participant with an ESOP Account may diversify within the
Plan their entire ESOP account balance.
Profit Sharing/Special Contributions
Contributions --
Profit sharing contributions are made based on the discretion of
the Board of Directors of the Company or Board of Directors of
any of the Employers. Special contributions are nondiscretionary
contributions made to certain eligible employees equal to a
certain percent of their eligible compensation. Profit
sharing/special contributions are credited to such a
participant's Profit Sharing Account. Participants may choose to
invest profit sharing/special contributions allocated to their
individual accounts in any or all of the available investment
options.
Vesting --
A participant's interest in a Profit Sharing Account is 100
percent vested after completing three years of service.
Distributions and Withdrawals --
The vested portion of the Profit Sharing Account is distributed
in the same manner as the Deferred Savings feature previously
mentioned.
Loans --
Loans may be made from the vested portion of the Profit Sharing
Account in the same manner as the Deferred Savings feature
previously mentioned.
Forfeited Accounts --
At December 31, 2003, forfeited nonvested Profit Sharing Accounts
totaled approximately $132,000. These forfeited nonvested
accounts will be used to reinstate the profit sharing
contributions of any reemployed participants pursuant to the
terms of the Plan, reduce the employer profit sharing
contributions to the Plan or reduce administrative expenses
incurred by the Plan.
2. Summary of Significant Accounting Policies
Basis of Accounting --
The financial statements of the Plan are maintained on an accrual
basis.
Investment Valuation --
Investments held by the Plan are carried at fair value. Fair
value for the New York Life Insurance Anchor Account and MainStay
Cash Reserves Fund approximates cost. Prior to January 1, 2004,
the MainStay Cash Reserves Fund was known as the Eclipse Money
Market Fund. The Plan's other investment valuations are based on
published market quotations. Participant loans are valued based
upon remaining unpaid principal balance plus any accrued but
unpaid interest.
Benefit Payments --
Distributions to Plan participants are recorded when paid.
Contributions --
Employer and participant contributions are recorded by the Plan
when received or determined to be receivable. Participant
contributions are deposited with the Plan by the Employers
through payroll reductions.
Administrative Expenses --
Administrative expenses of the Plan related to Trustee,
recordkeeping, legal and audit fees are paid primarily by the
Employers. Fees or commissions associated with each of the
investment options other than the MDU Resources Stock Fund are
paid primarily by participants as a deduction from the amount
invested or an offset to investment earnings and were
approximately $488,000 for the year ended December 31, 2003.
Administrative expenses of the Plan related to the MDU Resources
Stock Fund commissions and loan fees were paid by the Plan and
were approximately $82,000 for the year ended December 31, 2003.
Use of Estimates --
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
Other --
Securities transactions are recorded on a trade date basis.
Dividend income is recorded on the ex-dividend date. Interest
income is recorded as earned.
3. Investments
The following presents investments that represent 5 percent or
more of the Plan's net assets at December 31:
2003 2002
MDU Resources Stock Fund $196,547,050* $144,211,284*
MainStay S&P 500 Index Fund 21,451,086 16,483,860
Dodge & Cox Balanced Fund 20,354,122 10,951,757
New York Life Insurance
Anchor Account 15,866,888 **
* Includes both participant and nonparticipant-directed
investments
**Investment did not represent 5 percent or more of the Plan's
net assets at December 31, 2002
During 2003, the fair value of the Plan's investments (including
gains and losses on investments bought and sold, as well as held
during the year) appreciated as follows:
MDU Resources Stock Fund $54,495,287
Mutual Funds 13,619,788
$68,115,075
4. Cash and Cash Equivalents
Cash and cash equivalents represent funds temporarily invested in
the MainStay Cash Reserves Fund to provide liquidity for fund
reallocations and distributions of the MDU Resources Stock Fund.
5. Nonparticipant-directed Investments
Information about the net assets and the significant components
of the changes in net assets relating to the nonparticipant-
directed investments is as follows:
December 31,
2003 2002
Net assets, at fair value:
MDU Resources Stock Fund $62,986,688* $43,964,961*
MainStay Cash Reserves
Fund 1,327,781 936,518
Employer receivable 378,586 265,278
Dividends receivable 449,785 409,679
$65,142,840 $45,576,436
* Represents 5 percent or more of the Plan's net assets at
December 31.
Year Ended
December 31, 2003
Changes in net assets:
Contributions $ 5,355,828
Dividends 1,719,794
Interest 6,364
Net appreciation 17,147,893
Distributions to participants (1,843,264)
Transfers to participant-directed options (2,815,017)
Administrative expenses (5,194)
$19,566,404
6. Plan Merger
On January 1, 2003 the Umpqua River Navigation Company Retirement
Plan was merged into the Plan, which resulted in an increase in
net assets of $284,971.
7. Federal Income Taxes
The Internal Revenue Service (IRS) has determined and informed
the Company by a letter dated March 26, 2003, that the Plan and
related trust are designed for qualification as exempt from
federal income taxes in accordance with applicable sections of
the Code. The IRS based its determination on the application the
Plan submitted on February 22, 2002. Although the Plan has been
amended since submitting the determination letter application,
the Company believes that the Plan is designed and is currently
being operated in compliance with the applicable requirements of
the Code. The Plan will take all necessary steps to maintain its
qualified tax status.
8. Related-Party Transactions
The New York Life Insurance Anchor Account, MainStay Indexed Bond
Fund, MainStay S&P 500 Index Fund, MainStay Small Cap Opportunity
Fund and MainStay Cash Reserves Fund are managed by New York Life
Investment Management LLC, which are related parties to the
Recordkeeper. These arrangements therefore qualify as party-in-
interest transactions.
9. Prohibited Transactions
There were no nonexempt prohibited transactions, other than those
listed in Schedule H, Line 4a, Schedule of Delinquent Participant
Contributions, with respect to the Plan during the plan year
ended December 31, 2003.
10. Reconciliation of the Financial Statements to the Form 5500
The following is a reconciliation of net assets available for
benefits per the financial statements at December 31, 2003 to the
Form 5500:
2003
Net assets available for benefits per the
financial statements $295,418,921
Certain deemed distributions of participant
loans (1,000)
Net assets available for benefits per the
Form 5500 $295,417,921
The following is a reconciliation of certain deemed distributions
of participant loans per the financial statements to the Form
5500:
Year Ended
December 31, 2003
Certain deemed distributions per the
financial statements $ ---
Certain deemed distributions of participant loans 1,000
Certain deemed distributions per the Form 5500 $ 1,000
SUPPLEMENTAL
SCHEDULES
MDU RESOURCES GROUP, INC.
401(k) RETIREMENT PLAN
EMPLOYER IDENTIFICATION NUMBER (41-0423660) - PLAN NUMBER (004)
SCHEDULE H, LINE 4a - SCHEDULE OF DELINQUENT PARTICIPANT CONTRIBUTIONS
Year Ended December 31, 2003
Participant Contributions Total That Constitute Nonexempt
Transferred Late to Plan Prohibited Transactions
$3,202 $3,202
MDU RESOURCES GROUP, INC.
401(k) RETIREMENT PLAN
EMPLOYER IDENTIFICATION NUMBER (41-0423660) - PLAN NUMBER (004)
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2003
Current
Issuer Description Cost Value
MDU Resources Group, Inc.
Common Stock * 8,254,811 shares $115,405,541 $196,547,050
Mutual Funds:
American Funds -
EuroPacific Growth Fund 39,604 units 1,138,923 1,185,342
American Funds - The
Growth Fund of America 138,535 units 3,231,611 3,387,182
Baron Asset Fund 138,024 units 6,048,461 6,049,581
Davis New York
Venture Fund 43,672 shares 1,041,109 1,201,855
Dodge & Cox
Balanced Fund 278,671 units 18,353,411 20,354,122
MainStay Indexed
Bond Fund * 495,735 units 5,363,715 5,433,254
MainStay S&P 500
Index Fund * 837,279 units 23,896,559 21,451,086
MainStay Small Cap
Opportunity Fund * 192,404 units 3,059,262 3,232,392
Royce Total Return 67,491 units 646,645 721,486
RS Emerging Growth Fund 131,070 units 3,058,515 3,683,066
Templeton Foreign Fund 287,449 units 2,735,246 3,058,458
Money Market Fund:
MainStay Cash
Reserves Fund * 3,060,837 units 3,060,837 3,060,837
Pooled Separate Account:
New York Life Insurance
Anchor Account * 15,866,888 units 15,866,888 15,866,888
Participant Loan Funds * 5.00% to 5.25% --- 4,967,986
$202,906,723 $290,200,585
*Indicates party-in-interest investment
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
MDU Resources Group, Inc.
We have audited the accompanying statements of net assets
available for benefits of MDU Resources Group, Inc. 401(k)
Retirement Plan (the "Plan") as of December 31, 2003 and 2002,
and the related statement of changes in net assets available for
benefits for the year ended December 31, 2003. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States) and in
accordance with generally accepted auditing standards as
established by the Auditing Standards Board (United States).
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit also
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the net assets available for benefits of the
Plan as of December 31, 2003 and 2002, and the changes in net
assets available for benefits for the year ended December 31,
2003 in conformity with accounting principles generally accepted
in the United States of America.
Our audits were conducted for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
supplemental schedules listed in the Contents are presented for
the purpose of additional analysis and are not a required part of
the basic financial statements, but are supplementary information
required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, as amended. These schedules are the
responsibility of the Plan's management. Such schedules have
been subjected to the auditing procedures applied in our audits
of the basic financial statements and, in our opinion, are fairly
stated in all material respects when considered in relation to
the basic financial statements taken as whole.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Minneapolis, MN
June 18, 2004
SIGNATURE
The Plan. Pursuant to the requirements of the Securities
Exchange Act of 1934, the Employee Benefits Administrative
Committee has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
MDU Resources Group, Inc.
401(k) Retirement Plan
Date: June 23, 2004 By /s/ Warren L. Robinson
Warren L. Robinson
Chairman, Employee Benefits
Administrative Committee
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration
Statement No. 333-70622 of MDU Resources Group, Inc. on Form S-8
of our report dated June 18, 2004, appearing in this Annual
Report on Form 11-K of MDU Resources Group, Inc. 401(k)
Retirement Plan for the year ended December 31, 2003.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
June 23, 2004