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, 2004
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, 2004 and 2003
Statement of Changes in Net Assets Available for
Benefits -- Year ended December 31, 2004
Notes to Financial Statements
Supplemental Schedules:
Schedule H, Line 4a - Schedule of Delinquent Participant
Contributions - Year Ended December 31, 2004
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,
2004 2003
Assets:
Investments (Notes 3 and 5) $395,053,484 $287,139,748
Cash and cash equivalents
(Note 4) 3,415,749 3,060,837
398,469,233 290,200,585
Receivables:
Employer contributions 4,591,885 3,213,772
Participant contributions 676,508 398,986
Dividends 1,470,078 1,408,044
Other 3,772,714 197,534
Net assets available for benefits $408,980,418 $295,418,921
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, 2004
Additions to Net Assets
Attributed to:
Investment income:
Dividends $ 5,752,238
Interest 1,068,057
Net appreciation in fair value
of investments (Note 3) 37,914,450
44,734,745
Contributions:
Employers 11,394,668
Employees 19,277,858
Employee rollover 1,584,750
32,257,276
Total additions 76,992,021
Deductions from Net Assets
Attributed to:
Distributions to terminated
participants 22,107,656
Administrative expenses 62,018
Total deductions 22,169,674
Net increase in net assets
available for benefits before
plan mergers 54,822,347
Transfer of assets due to plan
mergers (Note 6) 58,739,150
Net assets available for
benefits at
beginning of year 295,418,921
Net assets available for
benefits at end of year $408,980,418
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 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.
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 $13,000 for the 2004
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 $3,000 for 2004. 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
- Forward Hoover Small Cap Equity Fund - Growth 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
- Templeton Foreign Fund - International Equity Mutual Fund
On March 2, 2005, the RS Emerging Growth Fund investment option
was replaced with the Forward Hoover Small Cap Equity 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 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
employees who were participants in the ESOP before January 1,
1987.
Contributions --
As of January 1, 1987, 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 --
Generally, a participant's interest in a Profit Sharing Account
is 100 percent vested after completing three years of service;
however, certain grandfathered vesting schedules are maintained
due to plan mergers.
Distributions and Withdrawals --
Generally, the vested portion of the Profit Sharing Account is
distributed in the same manner as the Deferred Savings feature
previously mentioned; however, certain grandfathered distribution
features are maintained due to plan mergers.
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, 2004, forfeited nonvested Profit Sharing Accounts
totaled approximately $280,000. 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. 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 $834,000 for the year ended December 31, 2004.
Administrative expenses of the Plan related to the MDU Resources
Stock Fund commissions and loan fees were paid by the Plan and
were approximately $62,000 for the year ended December 31, 2004.
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:
2004 2003
MDU Resources Stock Fund $216,827,933* $196,547,050*
MainStay S&P 500 Index Fund 26,320,540 21,451,086
Dodge & Cox Balanced Fund 32,661,928 20,354,122
New York Life Insurance
Anchor Account 40,779,228 15,866,888
* Includes both participant and nonparticipant-directed
investments
During 2004, 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 $23,374,839
Mutual Funds 14,539,611
$37,914,450
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,
2004 2003
Net assets, at fair value:
MDU Resources Stock Fund $72,402,797* $62,986,688*
MainStay Cash Reserves
Fund 1,141,615 1,327,781
Employer receivable 426,664 378,586
Dividends receivable 486,648 449,785
$74,457,724 $65,142,840
* Represents 5 percent or more of the Plan's net assets at
December 31.
Year Ended
December 31, 2004
Changes in net assets:
Contributions $ 6,224,890
Dividends 1,879,950
Interest 9,615
Net appreciation 7,763,615
Distributions to participants (1,880,254)
Transfers to participant-directed options (4,675,858)
Administrative expenses (7,074)
$ 9,314,884
6. Plan Mergers
On September 1, 2004, the Morse Bros., Inc. Employee's Profit
Sharing and Trust (MBI Plan), The Pouk & Steinle Retirement
Savings Plan (P&S Plan) and the Northwest AGC Chapters 401(k)
Profit Sharing Plan (Northwest Plan) as adopted by Oregon
Electric Construction, Inc. (OEC Portion) were merged into the
Plan. The net assets transferred by the MBI Plan were $33.8
million. The net assets transferred by the P&S Plan were
$57,131. The net assets transferred by the OEC Portion of the
Northwest Plan were $589,824.
On October 1, 2004, the Savings Plan for Salaried Employees of
Hawaiian Cement (Hawaiian Cement Plan) merged into the Plan. The
net assets transferred by the Hawaiian Cement Plan were $6.3
million.
On December 29, 2004, the Loy Clark Pipeline Company 401(k) Plan
(Loy Clark Plan) merged into the Plan. The net assets
transferred by the Loy Clark Plan were $111,890.
On December 31, 2004, the Rocky Mountain Contractors Employees'
Profit Sharing Plan and the Rocky Mountain Contractors Employees'
Pension Plan (collectively the Rocky Mountain Plans), as adopted
by Rocky Mountain Contractors, Inc. and Hamlin Electric Company,
and the Montana Contractors' Association, Inc. Money Purchase
Retirement Plan and Trust, as adopted by JTL Group, Inc. and the
Montana Contractors' Association, Inc. 401(k) Retirement Plan and
Trust, as adopted by JTL Group, Inc. (collectively the JTL Plans)
merged into the Plan. The net assets transferred by the Rocky
Mountain Plans were $2.3 million and are reflected in other
receivables at December 31, 2004. The net assets transferred by
the JTL Plans were $15.5 million, of which $1.5 million is
reflected in other receivables at December 31, 2004.
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 and 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, 2004.
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, 2004
Participant Contributions Total That Constitute Nonexempt
Transferred Late to Plan Prohibited Transactions
$ 29,985 $29,985
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, 2004
Current
Issuer Description Cost Value
MDU Resources Group, Inc.
Common Stock * 8,126,984 shares $118,807,481 $216,827,933
Mutual Funds:
American Funds -
EuroPacific Growth Fund 116,853 units 3,601,750 4,120,230
American Funds - The
Growth Fund of America 729,297 units 17,773,213 19,858,748
Baron Asset Fund 206,354 units 9,371,946 10,837,712
Davis New York
Venture Fund 235,036 shares 6,557,676 7,213,271
Dodge & Cox
Balanced Fund 411,618 units 28,737,150 32,661,928
MainStay Indexed
Bond Fund * 982,246 units 10,732,739 10,775,243
MainStay S&P 500
Index Fund * 942,713 units 26,409,701 26,320,540
MainStay Small Cap
Opportunity Fund * 331,204 units 5,941,185 6,024,609
Royce Total Return 290,950 units 3,160,702 3,567,051
RS Emerging Growth Fund 172,080 units 4,543,146 5,568,496
Templeton Foreign Fund 343,742 units 3,398,436 4,228,022
Money Market Fund:
MainStay Cash
Reserves Fund * 3,415,749 units 3,415,749 3,415,749
Pooled Separate Account:
New York Life Insurance
Anchor Account * 40,779,228 units 40,779,228 40,779,228
Participant Loan Funds * 5.00% to 11.50% --- 6,270,473
$283,230,102 $398,469,233
*Indicates party-in-interest investment
REPORT OF INDEPENDENT REGISTERED PUBIC ACCOUNTING FIRM
MDU Resources Group, Inc.
We have audited the accompanying statements of net assets available for
benefits of the MDU Resources Group, Inc. 401(k) Retirement Plan (the
"Plan") as of December 31, 2004 and 2003, and the related statement of
changes in net assets available for benefits for the year ended
December 31, 2004. 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). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. The Plan is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our
audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Plan's internal control over financial
reporting. Accordingly, we express no such opinion. 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, 2004 and 2003, and the changes in net assets available
for benefits for the year ended December 31, 2004, 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 audit of the basic
2004 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, Minnesota
June 14, 2005
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 16, 2005 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 14, 2005, appearing in this Annual
Report on Form 11-K of MDU Resources Group, Inc. 401(k)
Retirement Plan for the year ended December 31, 2004.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
June 16, 2005