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, 2002
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, 2002 and 2001
Statement of Changes in Net Assets Available for
Benefits -- Year ended December 31, 2002
Notes to Financial Statements
Supplemental Schedule:
Schedule H, Line 4i - Schedule of Assets (Held at
End of Year)
Independent Auditors' Report
Signature
Exhibit:
Consent of Independent Public Accountants
Statement Furnished Pursuant to Section 906 of
Sarbanes-Oxley Act of 2002
MDU RESOURCES GROUP, INC.
401(k) RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
2002 2001
Assets:
Investments (Notes 3 and 5) $203,125,630 $207,862,768
Cash and cash equivalents
(Note 4) 1,833,636 2,189,126
204,959,266 210,051,894
Receivables:
Employer contributions 2,411,697 1,275,226
Participant contributions 84,239 166,424
Dividends 1,338,641 1,276,410
Net assets available for benefits $208,793,843 $212,769,954
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, 2002
Additions to Net Assets
Attributed to:
Investment income:
Dividends $ 5,118,625
Interest 713,375
5,832,000
Contributions:
Employers 6,268,011
Employees 12,304,211
Employee rollover 2,906,148
21,478,370
Total additions 27,310,370
Deductions from Net Assets
Attributed to:
Net depreciation in fair value
of investments (Note 3) 19,591,633
Distributions to terminated
participants 11,633,121
Administrative expenses 61,727
Total deductions 31,286,481
Net decrease in net assets
available for benefits (3,976,111)
Net assets available for
benefits at
beginning of year 212,769,954
Net assets available for
benefits at end of year $208,793,843
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 $11,000 for the 2002
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 $1,000 for 2002. 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
14 currently available investment options:
- MDU Resources Group, Inc. Common Stock
- New York Life Anchor Account - Stable Value Option
- Baron Asset Fund - Growth Mutual Fund
- Davis New York Venture Fund - Growth Mutual Fund
- Dodge & Cox Balanced Fund - Growth and Income Mutual Fund
- Eclipse Indexed Bond Fund - Income Mutual Fund
- Eclipse Indexed Equity Fund - Growth and Income Mutual Fund
- Eclipse Small Cap Value Fund - Growth Mutual Fund
- Janus Balanced Fund - Growth and Income Mutual Fund
- Janus Fund - Growth Mutual Fund
- Janus Overseas Fund - International Equity Mutual Fund
- Royce Total Return Fund - Small-Cap Value Fund
- RS Emerging Growth Fund - Growth Mutual Fund
- Templeton Foreign Fund - International Equity Mutual Fund
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 to a
participant's Matching Contribution Account 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 common stock 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.
Contributions for common stock, 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.
Effective April 1, 2002, the Plan was amended to allow only
single sum distributions.
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, 1988 (1988 Effective
Date) or the date as of which an ESOP Account was established
under the Plan, whichever is later.
Contributions --
As of the 1988 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, 2002, forfeited nonvested Profit Sharing Accounts
totaled approximately $70,000. 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 Anchor Account and Eclipse Money
Market funds approximates cost. 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 MDU Resources Group, Inc. common
stock are paid primarily by participants as a deduction from the
amount invested or an offset to investment earnings and were
approximately $335,000 for the year ended December 31, 2002.
Administrative expenses of the Plan related to MDU Resources
Group, Inc. common stock commissions and loan fees were paid by
the Plan and were approximately $62,000 for the year ended
December 31, 2002.
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:
2002 2001
MDU Resources Group, Inc.
Common Stock $144,211,284* $155,540,995*
Eclipse Indexed Equity Fund 16,483,860 20,562,897
Dodge & Cox Balanced Fund 10,951,757 **
* Includes both participant and nonparticipant-directed
investments
**Investment did not represent 5 percent or more of Plan's net
assets at December 31, 2001.
During 2002, the fair value of the Plan's investments (including
gains and losses on investments bought and sold, as well as held
during the year) depreciated as follows:
MDU Resources Group, Inc. Common Stock $11,667,428
Mutual Funds 7,924,205
$19,591,633
4. Cash and Cash Equivalents
Cash and cash equivalents represents funds temporarily invested
in the Eclipse Money Market Fund to provide liquidity for fund
reallocations and distributions of MDU Resources Group, Inc.
common stock.
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,
2002 2001
Net assets, at fair value:
MDU Resources Group, Inc.
Common Stock $43,964,961* $46,657,077*
Eclipse Money Market Fund 936,518 880,856
Employer receivable 265,278 239,692
Dividends receivable 409,679 381,514
$45,576,436 $48,159,139
* Represents 5 percent or more of the Plan's net assets at
December 31.
Year Ended
December 31, 2002
Changes in net assets:
Contributions $ 3,987,551
Dividends 1,564,597
Interest 10,234
Net depreciation (3,759,387)
Distributions to participants (1,738,812)
Transfers to participant-directed options (2,641,793)
Administrative expenses (5,093)
$(2,582,703)
6. 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.
7. Related-Party Transactions
The New York Life Anchor Account is managed by the New York Life
Stable Value Group and the Eclipse Indexed Bond Fund, Eclipse
Indexed Equity Fund, Eclipse Money Market Fund and the Eclipse
Small Cap Value 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.
8. Prohibited Transactions
There were no non-exempt prohibited transactions with respect to
the Plan during the plan year ending December 31, 2002.
SUPPLEMENTAL
SCHEDULE
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, 2002
Current
Issuer Description Cost Value
MDU Resources Group, Inc.
Common Stock * 5,587,419 shares $108,867,379 $144,211,284
Mutual Funds:
Baron Asset Fund 117,048 units 5,612,983 4,028,790
Davis New York
Venture Fund 3,481 shares 73,454 72,894
Dodge & Cox
Balanced Fund 180,276 units 11,643,850 10,951,757
Eclipse Indexed
Bond Fund * 437,578 units 4,689,116 4,795,853
Eclipse Indexed
Equity Fund * 816,437 units 24,417,096 16,483,860
Eclipse Small Cap
Value Fund * 110,702 units 1,384,502 1,271,967
Janus Balanced Fund 111,978 units 2,256,580 2,002,175
Janus Fund 123,313 units 3,581,146 2,197,440
Janus Overseas Fund 56,788 units 1,389,451 868,284
RS Emerging Growth Fund 87,882 units 1,964,752 1,682,935
Templeton Foreign Fund 226,952 units 2,197,144 1,885,974
Money Market Fund:
Eclipse Money
Market Fund * 1,833,636 units 1,833,636 1,833,636
Pooled Separate Account:
New York Life
Anchor Account * 8,902,412 units 8,902,412 8,902,412
Participant Loan Funds * 5.25% to 5.75% --- 3,770,005
$178,813,501 $204,959,266
*Indicates party-in-interest investment
INDEPENDENT AUDITORS' REPORT
To 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, 2002 and 2001, and
the related statement of changes in net assets available for
benefits for the year ended December 31, 2002. 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 auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes 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, 2002 and 2001, and the changes in net
assets available for benefits for the year ended December 31,
2002 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 schedule listed in the Contents is presented for the
purpose of additional analysis and is not a required part of the
basic financial statements, but is 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. This schedule is the responsibility of the
Plan's management. Such schedule has been subjected to the
auditing procedures applied in our audits of the basic financial
statements and, in our opinion, is 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, Minnesota
June 6, 2003
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 26, 2003 By /s/ WARREN L. ROBINSON
Warren L. Robinson
Chairman, Employee Benefits
Administrative Committee