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, 2001
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, 2001 and 2000
Statement of Changes in Net Assets Available for
Benefits -- Year ended December 31, 2001
Notes to Financial Statements
Supplemental Schedule:
Schedule H, Line 4i - Schedule of Assets (Held at
End of Year)
Independent Auditors' Report for the Year ended
December 31, 2001
Report of Independent Public Accountants for the Year
ended December 31, 2000 (See Note 9 for further
discussion)
Signature
Exhibit:
Consent of Independent Public Accountants
MDU RESOURCES GROUP, INC.
401(k) RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
2001 2000
Assets:
Investments (Notes 3 and 5) $207,862,768 $240,635,177
Cash and cash equivalents
(Note 4) 2,189,126 2,016,192
210,051,894 242,651,369
Receivables:
Employer contributions 1,275,226 1,103,265
Participant contributions 166,424 94,748
Dividends 1,276,410 1,311,553
Net assets available for benefits $212,769,954 $245,160,935
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, 2001
Additions to Net Assets
Attributed to:
Investment income:
Dividends $ 5,104,097
Interest 665,049
5,769,146
Contributions:
Employers 4,585,922
Employees 11,094,563
Employee rollover 1,741,443
17,421,928
Total additions 23,191,074
Deductions from Net Assets
Attributed to:
Net depreciation in fair value
of investments (Note 3) 27,301,889
Distributions to terminated
participants 28,245,091
Administrative expenses 35,075
Total deductions 55,582,055
Net decrease in net assets
available for benefits (32,390,981)
Net assets available for
benefits at
beginning of year 245,160,935
Net assets available for
benefits at end of year $212,769,954
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
choose to 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. Effective January 1,
2002, the Company may delegate to a committee the authority to
amend or modify the Plan. The Board of Directors of the Company
shall approve certain amendments as identified in the plan
document.
The plan administrator is the committee of those individuals
serving from time to time in the position of or related position
of Chief Administrative Officer of the Company, Chief Financial
Officer of the Company, Vice President - Human Resources of the
Company, and four other individuals appointed by the Chief
Executive Officer who are employed by the Company or an Affiliate
of the Company. The recordkeeper and trustee of the Plan are New
York Life Benefits Services 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-free trust and
allows Employers to provide for employer matching contributions
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 an employee may participate in the Plan upon hire if
they are at least 18 years of age and a regular full-time or part-
time employee.
Contributions --
The Plan allowed participants to elect pre-tax deferral
contributions varying from one percent through 22 percent, in one
percent increments, of eligible compensation for each pay period,
up to a maximum pre-tax deferral contribution of $10,500 for the
2001 Plan year. Effective January 1, 2002, the Plan was amended
to increase the maximum employee contribution to 50 percent for a
participant who is not a highly compensated employee and 22
percent if the participant is a highly compensated employee, up
to a maximum pre-tax deferral contribution of $11,000 for the
2002 Plan year. Effective January 1, 2002, the Plan was also
amended to allow 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 other qualified
retirement plans 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.
An election is made by each participant to allocate contributions
in one percent increments to any or all of the following twelve
currently available investment options:
- MDU Resources Group, Inc. Common Stock
- New York Life Anchor Account - Stable Value Option
- Baron Asset 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
- RS Emerging Growth Fund - Growth Mutual Fund
- Templeton Foreign Fund - International Equity Mutual Fund
Prior to January 2, 2001, the Eclipse Indexed Bond Fund and the
Eclipse Indexed Equity Fund were known as the MainStay
Institutional Bond Fund and the MainStay Institutional Indexed
Equity Fund, respectively.
Employer Contributions --
Each participant's Employer may elect to provide a 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, which is
credited to such participant's Matching Contribution Account. 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. All matching contributions
are invested in common stock of the Company; however, effective
February 15, 2001, matching contributions are initially invested
in the 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 plan administrator.
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 is 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, effective January 1, 2002,
may diversify within the Plan their entire ESOP account balance.
Prior to January 1, 2002, the participant had to have both
attained age 55 and completed at least 10 years of participation
in order to elect to have their ESOP account balance diversified
within the Plan.
Profit Sharing/Special Contribution
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. Participants may
choose to invest profit sharing/special contribution
contributions allocated to their individual accounts in any or
all of the available investment options.
Vesting --
A participant's interest in a Profit Sharing/Special Contribution
Account is 100 percent vested after completing three years of
service.
Distributions and Withdrawals --
The vested portion of the Profit Sharing/Special Contribution
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/Special Contribution Account in the same manner as the
Deferred Savings feature previously mentioned.
Forfeited Accounts --
At December 31, 2001, forfeited nonvested accounts totaled
approximately $58,000. 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, as described in Note 4, 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 $264,000 for the year ended December 31, 2001.
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 $35,000 for the year ended
December 31, 2001.
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:
2001 2000
MDU Resources Group, Inc.
Common Stock $155,540,995* $193,358,685*
Eclipse Indexed Equity Fund 20,562,897 22,633,282
* Includes both participant and nonparticipant-directed
investments
During 2001, 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 $23,369,878
Mutual Funds 3,932,011
$27,301,889
4. Cash and Cash Equivalents
Cash and cash equivalents represents funds temporarily invested
in the Eclipse Money Market Fund (prior to January 2, 2001, known
as the MainStay Institutional 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,
2001 2000
Net assets, at fair value:
MDU Resources Group, Inc.
Common Stock $46,657,077* $56,297,930*
Eclipse Money Market Fund 1,262,370 1,000,323
Employer receivable 239,692 209,808
$48,159,139 $57,508,061
* Represents 5 percent or more of the Plan's net asset at
December 31.
Year Ended
December 31, 2001
Changes in net assets:
Contributions $ 3,541,711
Dividends 1,506,777
Interest 27,187
Net depreciation (6,939,299)
Distributions to participants (4,813,178)
Transfers to participant-directed options (2,665,688)
Administrative expenses (6,432)
$(9,348,922)
6. Federal Income Taxes
The Internal Revenue Service (IRS) has determined and informed
the Company by a letter dated July 2, 1998, that the Plan and
related trust are designed for qualification as exempt from
federal income taxes in accordance with applicable sections of
the Code. Although the Plan has been amended since receiving the
determination letter, the Company believes that the Plan is
designed and is currently being operated in compliance with the
applicable requirements of the Code.
On February 22, 2002, an application was made to the IRS for
determination on the qualification of the Plan for those Plan
amendments that have occurred since the prior determination
letter. The Company believes that the Plan, as amended,
continues to meet the requirements for tax qualification under
the Code. The Company is awaiting the IRS decision.
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, 2001.
9. Inability to Obtain Consent of Prior Independent Public
Accountants
There may be risks and the participants' recovery may be limited
as a result of the Plan's prior use of Arthur Andersen LLP as the
Plan's independent public accounting firm. On June 15, 2002,
Arthur Andersen LLP was convicted for obstruction of justice
charges. Arthur Andersen LLP audited the Plan for the year ended
December 31, 2000. On February 14, 2002, Arthur Andersen LLP was
dismissed as the Plan's independent auditors and on March 25,
2002, Deloitte & Touche LLP was hired as the Plan's independent
auditors for the 2002 fiscal year. In addition, on May 14, 2002,
Deloitte & Touche LLP was hired as the Plan's independent
auditors for the 2001 fiscal year. Because the former audit
partner and manager have left Arthur Andersen LLP, the Plan was
not able to obtain the written consent of Arthur Andersen LLP as
required by Section 7 of the Securities Act of 1933 (the
Securities Act). Accordingly, participants will not be able to
sue Arthur Andersen LLP pursuant to Section 11(a)(4) of the
Securities Act and therefore may have their recovery limited as a
result of the lack of consent.
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, 2001
Current
Issuer Description Cost Value
MDU Resources Group, Inc.
Common Stock * 5,525,435 shares $103,820,196 $155,540,995
Mutual Funds:
Baron Asset Fund 90,343 units 4,752,300 4,016,667
Dodge & Cox
Balanced Fund 115,453 units 7,567,348 7,552,933
Eclipse Indexed
Bond Fund * 263,934 units 2,827,567 2,771,306
Eclipse Indexed
Equity Fund * 780,672 units 24,673,011 20,562,897
Eclipse Small Cap
Value Fund * 32,509 units 370,120 390,758
Janus Balanced Fund 76,058 units 1,610,639 1,493,023
Janus Fund 103,404 units 3,608,521 2,543,731
Janus Overseas Fund 45,385 units 1,311,020 921,313
RS Emerging Growth Fund 51,935 units 1,588,457 1,662,441
Templeton Foreign Fund 173,226 units 1,723,143 1,602,344
Money Market Fund:
Eclipse Money
Market Fund * 2,189,126 units 2,189,126 2,189,126
Pooled Separate Account:
New York Life
Anchor Account * 5,398,040 units 5,398,040 5,398,040
Participant Loan Funds * 5.75% to 11.50% --- 3,406,320
$161,439,488 $210,051,894
*Indicates party-in-interest investment
INDEPENDENT AUDITORS' REPORT
To MDU Resources Group, Inc.:
We have audited the accompanying statement of net assets
available for benefits of MDU Resources Group, Inc. 401(k)
Retirement Plan (the Plan) as of December 31, 2001, and the
related statement of changes in net assets available for benefits
for the year then ended. 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
audit. The statement of net assets available for benefits of the
Plan for the year ended December 31, 2000 was audited by other
auditors whose report, dated June 7, 2001, expressed an
unqualified opinion on that statement.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. 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 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 audit provides a reasonable
basis for our opinion.
In our opinion, such 2001 financial statements present fairly, in
all material respects, the net assets available for benefits of
the Plan as of December 31, 2001, and the changes in net assets
available for benefits for the year then ended in conformity with
accounting principles generally accepted in the United States of
America.
Our audit was 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 audit of the basic 2001
financial statements and, in our opinion, is fairly stated in all
material respects when considered in relation to the basic
financial statements taken as a whole.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Minneapolis, Minnesota,
June 10, 2002
THIS IS A COPY OF A PREVIOUSLY ISSUED ARTHUR ANDERSEN LLP REPORT.
THIS REPORT HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.
(SEE NOTE 9 FOR FURTHER DISCUSSION)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
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 as of December 31, 2000 and 1999, and the related
statement of changes in net assets available for benefits for the
year ended December 31, 2000. These financial statements and the
schedule referred to below are the responsibility of the plan
administrator. Our responsibility is to express an opinion on
these financial statements and supplemental schedule based on our
audits.
We conducted our audits in accordance with auditing standards
generally accepted in the 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 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, the financial statements referred to above
present fairly, in all material respects, the net assets
available for benefits of MDU Resources Group, Inc. 401(k)
Retirement Plan as of December 31, 2000 and 1999, and the changes
in net assets available for benefits for the year ended
December 31, 2000, in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental
schedule is presented for purposes of additional analysis and is
not a required part of the basic financial statements but is
supplemental 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
supplemental schedule is the responsibility of the plan
administrator. This information has been subjected to the
auditing procedures applied in our audit of the basic financial
statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
June 7, 2001
SIGNATURE
The Plan. Pursuant to the requirements of the Securities
Exchange Act of 1934, the MDU Resources Group, Inc. 401(k)
Retirement Plan 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, 2002 By /s/ DOUGLAS C. KANE
Douglas C. Kane (Chairman)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the previously
filed Registration Statements of MDU Resources Group, Inc. on
Form S-8 (Reg. Nos. 333-06103, No. 333-06105, No. 333-70622, and
No. 333-72595) of our report dated June 10, 2002, appearing in
the Annual Report on this Form 11-K of MDU Resources Group, Inc.
401(k) Retirement Plan for the year ended December 31, 2001.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Minneapolis, Minnesota,
June 26, 2002