Annual Report (Form 10-K), fiscal year 1994





ITEM 3. LEGAL PROCEEDINGS
Williston Basin has been named as a defendant in a legal action primarily related to certain natural gas price and volume issues. Such suit was filed by Moncrief as described under "Pending Litigation". Williston Basin's assessment of this proceeding is included in the description of the litigation.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth quarter of 1994.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
MDU Resources Group, Inc. common stock is listed on the New York Stock Exchange and the Pacific Stock Exchange and uses the symbol "MDU". The price range of the Company's common stock as reported by the Wall Street Journal composite tape during 1994 and 1993 and dividends declared thereon were as follows:
Common Common Common Stock Stock Price Stock Price Dividends (High) (Low) Per Share
First Quarter . . . . . . . . $32 1/4 $29 3/8 $ .39 Second Quarter. . . . . . . . 32 1/8 26 1/2 .39 Third Quarter . . . . . . . . 28 1/4 25 3/8 .40 Fourth Quarter. . . . . . . . 28 25 3/8 .40 $1.58
First Quarter . . . . . . . . $29 1/4 $25 7/8 $ .37 Second Quarter. . . . . . . . 32 1/2 29 .37 Third Quarter . . . . . . . . 32 29 3/4 .39 Fourth Quarter. . . . . . . . 33 1/8 30 1/2 .39 $1.52
As of December 31, 1994, the Company's common stock was held by approximately 14,600 stockholders.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
Reference is made to selected Financial Data on pages 52 and 53 of the Company's Annual Report which is incorporated herein by reference.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The following table (in millions of dollars) summarizes the contribution to consolidated earnings by each of the Company's businesses.
Years ended December 31, Business 1994 1993 1992 Utility -- Electric . . . . . . . . . . . . $11.7 $12.6 $13.3 Natural gas. . . . . . . . . . . .3 1.2 1.4 12.0 13.8 14.7 Natural gas transmission . . . . . 6.1 4.7 3.5 Mining and construction materials. . . . . . . . . . . . 11.6 12.4 10.7 Oil and natural gas production . . 9.3 7.1 5.7 Earnings on common stock . . . . . $39.0 $38.0 $34.6 Earnings per common share. . . . . $2.06 $2.00 $1.82 Return on average common equity. . 12.1% 12.3% 11.6%
Earnings information presented in this table and in the following discussion is before the $8.9 million ($5.5 million after-tax) cumulative effect of a 1993 accounting change. See Note 1 of Notes to Consolidated Financial Statements for a further discussion of this accounting change.
________________________________
Reference should be made to Items 1 and 2 -- "Business and Properties" and Notes to Consolidated Financial Statements for information pertinent to various commitments and contingencies.
Financial and operating data
The following tables (in millions, where applicable) are key financial and operating statistics for each of the Company's business units. Certain reclassifications have been made in the following statistics for 1992 and 1993 to conform to the 1994 presentation. Such reclassifications had no effect on net income or common stockholders' investment as previously reported.
Montana-Dakota -- Electric Operations
Years ended December 31, 1994 1993* 1992
Operating revenues . . . . . . . . $133.9 $131.1 $123.9 Fuel and purchased power . . . . . 43.2 41.3 37.9 Operation and maintenance expenses . . . . . . . . . . . . 41.0 37.4 34.2 Operating income . . . . . . . . . 27.6 30.5 30.2
Retail sales (kWh) . . . . . . . . 1,955.1 1,893.7 1,829.9 Power deliveries to MAPP (kWh) . . 444.5 511.0 352.6
Cost of fuel and purchased power per kWh. . . . . . . . . . $ .017 $ .016 $ .016
Montana-Dakota -- Natural Gas Distribution Operations
Years ended December 31, 1994 1993* 1992
Operating revenues: Sales. . . . . . . . . . . . . . $151.7 $151.7 $123.8 Transportation & other . . . . . 3.6 4.3 4.4 Purchased natural gas sold . . . . 111.3 114.0 89.5 Operation and maintenance expenses . . . . . . . . . . . . 30.0 28.6 26.0 Operating income . . . . . . . . . 3.9 4.7 4.5
Volumes (dk): Sales. . . . . . . . . . . . . . 31.8 31.2 26.7 Transportation . . . . . . . . . 9.3 12.7 13.7 Total throughput . . . . . . . . . 41.1 43.9 40.4
Degree days (% of normal). . . . . 96.7% 105.5% 87.1% Cost of natural gas, including transportation, per dk . . . . . $ 3.50 $ 3.66 $ 3.35
*See Note 1 of Notes to Consolidated Financial Statements for a discussion of an accounting change to reflect unbilled revenues.
Williston Basin Years ended December 31, 1994 1993 1992
Operating revenues: Sales for resale. . . . . . . . . $ --- $51.3* $63.5* Transportation & other. . . . . . 70.9* 40.0* 35.5* Purchased natural gas sold . . . . --- 20.6 33.6 Operation and maintenance expenses . . . . . . . . . . . . 38.8** 39.0** 33.0** Operating income . . . . . . . . . 21.3 20.1 21.3
Volumes (dk): Sales for resale-- Montana-Dakota. . . . . . . . . --- 13.0 16.5 Other . . . . . . . . . . . . . --- .2 .3 Transportation-- Montana-Dakota. . . . . . . . . 33.0 18.5 11.2 Other . . . . . . . . . . . . . 30.9 40.9 53.3 Total throughput . . . . . . . . . 63.9 72.6 81.3 _________________________________ * Includes recovery of deferred natural gas contract buy-out/buy-down costs. . . . . $ 8.3 $13.0 $ 5.8 ** Includes amortization of deferred natural gas contract buy-out/buy-down costs. . . . . $ 9.3 $11.8 $ 6.2
Knife River
Years ended December 31, 1994 1993 1992
Operating revenues: Coal. . . . . . . . . . . . . . . $45.6 $44.2 $43.8 Construction materials. . . . . . 71.0 46.2 1.2 Operation and maintenance expenses . . . . . . . . . . . . 84.5 59.6 21.2 Reclamation expense. . . . . . . . 3.8 3.1 3.0 Severance taxes. . . . . . . . . . 4.5 4.4 4.3 Operating income . . . . . . . . . 16.6 17.0 11.5
Sales (000's): Coal (tons) . . . . . . . . . . . 5,206 5,066 4,913 Aggregates (tons) . . . . . . . . 2,688 2,391 263 Asphalt (tons). . . . . . . . . . 391 141 --- Ready-mixed concrete (cubic yards) . . . . . . . . . 315 157 ---
Fidelity Oil
Years ended December 31, 1994 1993 1992
Operating revenues . . . . . . . . $38.0 $39.1 $33.8 Operation and maintenance expenses. . . . . . . . . . . . . 12.0 11.6 12.0 Depreciation, depletion and amortization. . . . . . . . . . . 13.5 12.0 8.8 Operating income . . . . . . . . . 8.8 11.8 9.5
Production (000's): Oil (barrels) . . . . . . . . . 1,565 1,497 1,531 Natural gas (Mcf). . . . . . . . 9,228 8,817 5,024
Average sales price: Oil (per barrel) . . . . . . . . $13.14 $14.84 $16.74 Natural gas (per Mcf). . . . . . 1.84 1.86 1.53
1994 compared to 1993
Montana-Dakota--Electric Operations
The decline in operating income reflects increased fuel and purchased power costs, principally higher demand charges associated with the pass-through from Basin of periodic maintenance costs and the purchase of an additional five megawatts of firm capacity through a participation power contract. Increased operation expenses, primarily higher payroll and benefit-related costs, largely the accrual of SFAS No. 106 costs, also negatively affected operating income. In addition, decreased deliveries to the MAPP, the result of a delay in water conservation efforts by hydroelectric generators, reduced operating income. Increased retail sales to all major markets, the result of increased demand due to more normal summer weather than that experienced in 1993, partially offset the operating income decline.
Earnings for the electric business decreased due to the operating income decline and increased long-term debt interest, resulting from lower interest received from Williston Basin due to the retirement of intercompany debt, partially offset by the retirement of $15.0 million of 5.8 percent medium-term notes on April 1, 1994. Decreased income taxes somewhat offset the earnings decline.
Montana-Dakota--Natural Gas Distribution Operations
Operating income decreased at the natural gas distribution business from the corresponding period in 1993 due to a 1.7 million decatherm (MMdk) weather-related decline in sales and decreased transportation volumes, primarily due to two oil refineries bypassing Montana-Dakota's distribution facilities. In addition, higher operation and maintenance expenses, primarily increased payroll and benefit-related costs and increased distribution and sales expenses due to the system expansion into north-central South Dakota, and increased depreciation expense reduced operating income. The benefits of general rate increases placed into effect in December 1993, January 1994, November 1994, and December 1994 in North Dakota, South Dakota, Wyoming and Montana and the addition of nearly 5,000 customers improved operating income. Also contributing operating income was a Wyoming Supreme Court order granting recovery of a prior refund.
Gas distribution earnings decreased due to the operating income decline and increased interest expense, primarily carrying costs being accrued on natural gas costs refundable through rate adjustments, higher financing costs related to increased capital expenditures and the previously described intercompany debt retirement. The return earned on the natural gas storage inventory (included in Other Income--Net) somewhat mitigated the decline in earnings.
Williston Basin
The increase in operating income reflects a January 1994 rate change due to a rate stipulation agreement with the FERC and the realization of revenue related to 5.0 MMdk of natural gas transported to storage. Prior to the implementation of Order 636, these revenues were recognized during the winter months when gas was withdrawn from storage whereas such revenues are now recognized primarily in the summer months when gas is transported to storage. In addition, decreased operation and maintenance expenses, depreciation and taxes other than income, primarily due to the sale or transfer of unneeded facilities, further improved operating income. Decreased net throughput, primarily to off-system markets and LDC end users, partially offset the operating income increase. A 1993 out-of-period credit adjustment to take-or-pay surcharge amortizations also partially offset the improvement in operating income. Income from company production decreased due to lower average prices, partially offset by higher production.
Earnings for this business increased due to the operating income improvement, decreased long-term debt interest, the result of debt refinancing and debt retirements in July 1993, and April 1994, respectively, and increased interest being accrued on gas supply realignment transition costs (included in Other Income-- Net). Partially offsetting the earnings improvement were increased carrying costs associated with the natural gas repurchase commitment, due to higher average rates, and decreased investment income, the result of lower investable funds stemming from a regulatory refund made in mid-1994.
Knife River
Coal Operations --
Operating income for the coal operations decreased primarily due to increased operation and reclamation expenses. Higher overburden removal costs at the Beulah Mine and costs associated with an early retirement program stemming from the planned closing of the Gascoyne Mine in mid-1995 were the primary factors increasing operation expense. Reclamation expense increased as a result of higher costs associated with the planned Gascoyne Mine closure. An improvement in sales, primarily at the Gascoyne Mine, mainly the result of increased demand by electric generation customers, and increased selling prices at the Beulah Mine partially offset the decline in coal operating income.
Construction Materials Operations --
Increased sales due to the September 1993 acquisition of the Oregon construction materials businesses and improved cement, asphalt and building materials sales at the Alaskan operations were the primary contributors to the increase in construction materials operating income. Somewhat offsetting this improvement was the effects of a seasonal first quarter loss experienced at the Alaskan operations which was acquired in April 1993 and reduced aggregate and ready-mixed concrete sales at these operations due to fewer large commercial construction projects in the area than a year ago.
Consolidated --
Earnings decreased due to the decline in coal operating income and reduced investment income, primarily lower investable funds due to the aforementioned acquisitions. The improvement in construction materials operating income somewhat mitigated the earnings decline.
Fidelity Oil
Operating income for the oil and natural gas production business declined as a result of lower average oil prices and a volume-related increase in operation expenses and depreciation, depletion and amortization. Partially offsetting the operating income decline was an improvement in oil and natural gas production.
Earnings for this business improved due to the realization of investment gains related to the sale of an equity investment in General Atlantic Resources, Inc., which were $3.3 million (after- tax) more than corresponding gains realized in 1993. The decline in operating income partially offset the earnings increase.
1993 compared to 1992
Montana-Dakota--Electric Operations
Operating income for the electric business increased due to an improvement in retail sales to residential and commercial markets, primarily the result of colder weather in the first quarter of 1993. Also, improving operating income was an increase in deliveries into the MAPP, the result of water conservation efforts by hydroelectric generators and the temporary shutdown of a nuclear generating station in Iowa. Increased fuel and purchased power costs, largely higher demand charges associated with the purchase of an additional five megawatts of firm capacity through a participation power contract partially offset the improvement in operating income. Higher operation and maintenance expenses also negatively affected operating income. Employee benefit-related costs increased operation expense while higher costs associated with repairs made at the Heskett, Big Stone and Coyote stations accounted for the increase in maintenance expense.
Earnings from this business unit declined as a result of a decrease in Other Income--Net, reflecting the on-going effects of adopting SFAS No. 106, and increased federal income taxes. A decrease in interest expense due to lower interest rates stemming from long-term debt refinancing in 1992 and lower average short- term borrowings and interest rates, and the aforementioned improvement in operating income, somewhat offset the earnings decline.
Montana-Dakota--Natural Gas Distribution Operations
Sales increases of 4.5 MMdk, due to significantly colder weather than 1992 and the addition of over 3,500 residential and commercial customers, improved operating income for the natural gas distribution business. However, partially offsetting this improvement were the 1992 refinement of the estimated amount of delivered but unbilled natural gas volumes and increased operation and depreciation expenses. Employee benefit-related costs and distribution and sales expenses related to the system expansion into north-central South Dakota accounted for the majority of the operation expense increase. A Wyoming rate decrease effective in the second quarter of 1992 also reduced the operating income improvement.
Gas distribution earnings decreased due to higher financing costs related to increased capital expenditures and carrying charges being accrued on natural gas costs refundable through rate adjustments, offset in part by interest savings resulting from 1992 long-term debt refinancing. The operating income change and increased Other Income--Net, primarily due to the return being earned on deferred storage costs and increased interest income earned on natural gas costs recoverable through rate adjustments in Montana, reduced the earnings decline.
Williston Basin
Operating income declined at the natural gas transmission business as a result of decreased transportation volumes reflecting the effects of bypasses by two major transportation customers. Partially offsetting the effects of these bypasses were the increased movement of 3.4 MMdk of natural gas held under the repurchase commitment, due to favorable natural gas prices, and higher volumes transported on the November 1992 interconnection with NSP (1.8 MMdk), although at lower average rates than those replaced. Operating income was also negatively affected by the delay in the implementation of Order 636 until November 1, 1993. See Items 1 and 2 for Williston Basin for further discussions on the implementation of Order 636. Operation expenses increased slightly due to additional reserves related to the Koch settlement, increased transmission expenses and higher employee benefit-related costs. Largely offsetting the increased operation expenses are lower contract restructuring amortizations, an out-of-period adjustment to take-or-pay surcharge amortizations and a 1992 accrual for retroactive company production royalties. An adjustment to regulatory reserves reflected in operating revenues offset the effects of the additional reserves provided for the Koch settlement. Maintenance expenses increased as a result of compressor overhauls at several compressor station facilities. A weather-related sales improvement of 3.3 MMdk combined with increased general rates implemented in November 1992, partially offset the operating income decline. Income from company production improved due to increased production, but at lower average prices.
Earnings for this business unit increased due to reduced interest expense on long-term debt, the result of debt refinancing in mid-1993, and lower carrying costs associated with the natural gas repurchase commitment, primarily the result of both lower borrowings and decreased average rates, offset in part by the decline in operating income discussed above.
Knife River
Coal Operations --
Operating income decreased due to reduced selling prices at the Gascoyne Mine, effective June 1, 1992, following an amendment to the current coal supply agreement, and increased operation expenses. Higher overburden removal costs at the Beulah Mine and the accrual of SFAS No. 106 costs were the primary reasons for the operation expense increase. An improvement in tons sold at all mines, mainly the result of increased demand by electric generation customers, somewhat reduced the coal operating income decline.
Construction Materials Operations --
Increased sales from the Alaskan and Oregon construction materials businesses acquired in April and September 1993, respectively, was the primary reason for the significant increase in construction materials operating income.
Consolidated --
Earnings improved due to the construction materials operating income improvement. These increased earnings were somewhat reduced by lower coal operating income, decreased investment income (included in Other Income--Net), primarily resulting from lower investable funds due to the 1993 acquisitions and lower earned returns, and increased federal income taxes.
Fidelity Oil
Operating income for the oil and natural gas production business increased as a result of higher natural gas production and prices. In addition, decreased operation and maintenance expenses per equivalent barrel were somewhat offset by volume-related increases in such costs. Partially offsetting the operating income improvement was a decline in oil production and prices and increased depreciation, depletion and amortization, reflecting both increased production and higher rates.
The increase in operating income was further improved by the realization of certain investment gains resulting in the earnings improvement for this business. Increased interest expense, stemming from both higher average borrowings and rates, and increased federal income taxes, somewhat reduced earnings.
Prospective Information
Each of the Company's businesses is subject to competition, varying in both type and degree. See Items 1 and 2 for a further discussion on the effects of these competitive forces on each of the Company's businesses.
The operating results of the Company's utility and pipeline businesses are significantly influenced by the weather, the general economies of their respective service territories, and the ability to recover costs through the regulatory process.
In January 1995, Montana-Dakota, in an effort to increase the efficiency of its electric and natural gas operations, announced plans to close 45 district offices throughout its service area during 1995 and early 1996. The closure of these offices will reduce Montana-Dakota's workforce by approximately 90 employees.
Beginning October 1992, as a result of prevailing natural gas prices, Williston Basin began to sell and transport a portion of the natural gas held under the repurchase commitment. Williston Basin will continue to aggressively market this natural gas whenever market conditions are favorable. In addition, it will continue to seek long-term sales contracts. See Items 1 and 2 under Williston Basin for additional information on the natural gas held under this repurchase agreement.
In June 1994, Knife River was notified by the owners of the Big Stone Station that its contract for supplying approximately 2.1 million tons of lignite annually would not be renewed. The current contract expires in mid-1995 and Knife River anticipates closing the Gascoyne Mine upon the expiration of the contract. The costs of closing the Gascoyne Mine are not expected to have a significant effect on Knife River's results of operations.
Knife River continues to seek additional growth opportunities. These include not only identifying possibilities for alternate uses of lignite coal but also investigating the acquisition of other surface mining properties, particularly those relating to sand and gravel aggregates and related products such as ready-mixed concrete, asphalt and various finished aggregate products. See Items 1 and 2 under Knife River for a discussion of acquisitions made during 1992 and 1993.
See Items 1 and 2 for Montana-Dakota and Note 15 of Notes to Consolidated Financial Statements contained in the 1994 Annual Report for a further discussion on the Company's 1993 adoption of SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions" and the Company's efforts regarding regulatory recovery.
Liquidity and Capital Commitments
The Company's construction costs and additional investments in mining and construction materials, and oil and natural gas activities (in millions of dollars) for 1992 through 1994 and as anticipated for 1995 through 1997 are summarized in the following table, which also includes the Company's capital needs for the retirement of maturing long-term securities.
Estimated 1992 1993 1994 Company/Description 1995 1996 1997 Montana-Dakota: $ 13.2 $ 16.2 $14.2 Electric $ 17.1 $ 20.4 $ 16.9 6.5 15.0 13.2 Natural Gas Distribution 8.5 9.4 9.6 19.7 31.2 27.4 25.6 29.8 26.5 9.4 5.4 14.4 Williston Basin 11.8 22.9 15.6 16.3 46.5 3.6 Knife River 7.4 8.1 7.5 25.8 24.9 38.6 Fidelity 36.0 36.0 36.0 --- 1.0 1.0 Prairielands 4.6 .1 .8 71.2 109.0 85.0 85.4 96.9 86.4
Retirement/Repurchase 131.6 3.2 22.8 of Securities 20.6 17.5 16.5 $202.8 $112.2 $107.8 Total $106.0 $114.4 $102.9
In 1994 the Company's regulated businesses operated by Montana- Dakota and Williston Basin provided all of the funds needed for construction purposes. The Company's 1994 capital needs to retire maturing long-term securities were $22.8 million.
It is anticipated that Montana-Dakota will continue to provide all of the funds required for its construction requirements for the years 1995 through 1997 from internal sources and through the use of its $30 million revolving credit and term loan agreement, $17 million of which is outstanding at December 31, 1994, and through the issuance of long-term debt, the amount and timing of which will depend upon the Company's needs, internal cash generation and market conditions.
Williston Basin expects to meet its construction requirements and financing needs for the years 1995 through 1997 with a combination of internally generated funds and lines of credit aggregating $35 million, none of which is outstanding at December 31, 1994, and through the issuance of long-term debt, the amount and timing of which will depend upon the Company's needs, internal cash generation and market conditions. On April 1, 1994, Williston Basin borrowed $25 million under a term loan agreement, with the proceeds used solely for the purpose of refinancing purchase money mortgages payable to the Company. At December 31, 1994, $17.5 million is outstanding under the term loan agreement.
Knife River's 1994 capital needs were met through funds on hand and funds generated from internal sources. It is anticipated that funds on hand, funds generated from internal sources and lines of credit aggregating $11 million, none of which is outstanding at December 31, 1994, will continue to meet the needs of this business unit for 1995 through 1997, excluding funds which may be required for future acquisitions.
Fidelity Oil's 1994 capital needs related to its oil and natural gas acquisition, development and exploration program were met through funds generated from internal sources and a $20 million line of credit. It is anticipated that Fidelity's 1995 through 1997 capital needs will be met from internal sources and its line of credit. At December 31, 1994, $3.0 million is outstanding under the line of credit.
See Note 13 of Notes to Consolidated Financial Statements for a discussion of notices of proposed deficiency received from the IRS proposing substantial additional income taxes. The level of funds which could be required as a result of the proposed deficiencies could be significant if the IRS position were upheld.
Prairielands' 1994 capital needs were met through funds generated internally and lines of credit aggregating $5.4 million, $680,000 of which is outstanding at December 31, 1994. It is anticipated that Prairieland's 1995 through 1997 capital needs will be met from internal sources and its lines of credit.
The Company utilizes its lines of credit aggregating $40 million and its $30 million revolving credit and term loan agreement to meet its short-term financing needs and to take advantage of market conditions when timing the placement of long- term or permanent financing. There were no borrowings outstanding at December 31, 1994, under the lines of credit.
The Company's issuance of first mortgage debt is subject to certain restrictions imposed under the terms and conditions of its Indenture of Mortgage. Generally, those restrictions require the Company to pledge $1.43 of unfunded property to the Trustee for each dollar of indebtedness incurred under the Indenture and that annual earnings (pretax and before interest charges), as defined in the Indenture, equal at least two times its annualized first mortgage bond interest costs. Under the more restrictive of the two tests, as of December 31, 1994, the Company could have issued approximately $114 million of additional first mortgage bonds.
The Company's coverage of fixed charges including preferred dividends was 2.9 and 3.0 times for 1994 and 1993, respectively. Additionally, the Company's first mortgage bond interest coverage was 3.3 times in 1994 compared to 3.4 times in 1993. Stockholders' equity as a percent of total capitalization was 58% and 56% at December 31, 1994 and 1993, respectively.
Effects of Inflation
The Company's consolidated financial statements reflect historical costs, thus combining the impact of dollars spent at various times. Such dollars have been affected by inflation, which generally erodes the purchasing power of monetary assets and increases operating costs. During times of chronic inflation, the loss of purchasing power and increased operating costs could potentially result in inadequate returns to stockholders primarily because of the lag in rate relief granted by regulatory agencies. Further, because the ratemaking process restricts the amount of depreciation expense to historical costs, cash flows from the recovery of such depreciation are inadequate to replace utility plant.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to Pages 27 through 51 of the Annual Report.
ITEM 9.

ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to Pages 2 through 5 and 12 and 13 of the Company's Proxy Statement dated March 6, 1995 (Proxy Statement) which is incorporated herein by reference.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
Reference is made to Pages 6 through 11 of the Proxy Statement.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Reference is made to Page 13 of the Proxy Statement.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements, Financial Statement Schedules and Exhibits.
Index to Financial Statements and Financial Statement Schedules. Page 1. Financial Statements:
Report of Independent Public Accountants. . . . . * Consolidated Statements of Income for each of the three years in the period ended December 31, 1994 . . . . . . . . . . . . . . . * Consolidated Balance Sheets at December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . * Consolidated Statements of Capitalization at December 31, 1994, 1993 and 1992. . . . . . . . * Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 1994 . . . . . . . . . . . . . . . * Notes to Consolidated Financial Statements. . . . *
2. Financial Statement Schedules (Schedules are omitted because of the absence of the conditions under which they are required, or because the information required is included in the Company's Consolidated Financial Statements and Notes thereto.)
____________________
* The Consolidated Financial Statements listed in the above index which are included in the Company's Annual Report to Stockholders for 1994 are hereby incorporated by reference. With the exception of the pages referred to in Items 6 and 8, the Company's Annual Report to Stockholders for 1994 is not to be deemed filed as part of this report. 3. Exhibits:
3(a) Composite Certificate of Incorporation of MDU Resources Group, Inc., as amended to date . . . . . . . . . . . . . . . . . . ** 3(b) By-laws of MDU Resources Group, Inc., as amended to date. . . . . . . . . . . . . ** 4(a) Indenture of Mortgage, dated as of May 1, 1939, as restated in the Forty-Fifth Supplemental Indenture, dated as of April 21, 1992, and the Forty-Sixth through Forty-Eighth Supplements thereto between the Company and the New York Trust Company (The Bank of New York, successor Corporate Trustee) and A. C. Downing (W. T. Cunningham, successor Co-Trustee), filed as Exhibit 4(a) in Registration No. 33-66682; and Exhibits 4(e), 4(f) and 4(g) in Registration No. 33-53896. . . . . . . . * + 10(a) Management Incentive Compensation Plan, filed as Exhibit 10(a) in Registration No. 33-66682. . . . . . . . . . . . . . . . * + 10(b) 1992 Key Employee Stock Option Plan, filed as Exhibit 10(f) in Registration No. 33-66682. . . . . . . . . . . . . . . . * + 10(c) Restricted Stock Bonus Plan, filed as Exhibit 10(b) in Registration No. 33-66682. . . . . . . . . . . . . . . . * + 10(d) Supplemental Income Security Plan, as amended to date . . . . . . . . . . . . . . ** + 10(e) Directors' Compensation Policy, filed as Exhibit 10(d) in Registration No. 33-66682. . . . . . . . . . . . . . . . * + 10(f) Deferred Compensation Plan for Directors, filed as Exhibit 10(e) in Registration No. 33-66682. . . . . . . . . . . . . . . . * 13 Selected financial data, financial statements and supplementary data as contained in the Annual Report to Stockholders for 1994 . . . . . . . . . . . ** 21 Subsidiaries of MDU Resources Group, Inc. . ** 23(a) Consent of Independent Public Accountants . ** 23(b) Consent of Engineer . . . . . . . . . . . . ** 23(c) Consent of Engineer . . . . . . . . . . . . ** 27 Financial Data Schedule . . . . . . . . . . **
(b) Reports on Form 8-K.
None. ____________________
* Incorporated herein by reference as indicated. ** Filed herewith. + Management contract, compensatory plan or arrangement required to be filed as an exhibit to this form pursuant to Item 14(c) of this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MDU RESOURCES GROUP, INC.
By: /s/ Harold J. Mellen, Jr. Harold J. Mellen, Jr. (President and Chief Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the date indicated.
Signature Title Date
/s/ Harold J. Mellen, Jr. Chief Executive March 2, 1995 Harold J. Mellen, Jr. Officer (President and Chief Executive Officer)and Director
/s/ Douglas C. Kane Chief Operating March 2, 1995 Douglas C. Kane (Executive Vice Officer and President and Chief Operating Officer) Director
/s/ Warren L. Robinson Chief Financial March 2, 1995 Warren L. Robinson (Vice President, Officer Treasurer and Chief Financial Officer)
/s/ Vernon A. Raile Chief Accounting March 2, 1995 Vernon A. Raile (Vice President, Officer Controller and Chief Accounting Officer)
/s/ John A. Schuchart Director March 2, 1995 John A. Schuchart (Chairman of the Board)
/s/ Richard L. Muus Director March 2, 1995 Richard L. Muus
/s/ Robert L. Nance Director March 2, 1995 Robert L. Nance
/s/ John L. Olson Director March 2, 1995 John L. Olson
/s/ San W. Orr, Jr. Director March 2, 1995 San W. Orr, Jr.
/s/ Charles L. Scofield Director March 2, 1995 Charles L. Scofield
/s/ Homer A. Scott, Jr. Director March 2, 1995 Homer A. Scott, Jr.
/s/ Joseph T. Simmons Director March 2, 1995 Joseph T. Simmons
/s/ Stanley F. Staples, Jr. Director March 2, 1995 Stanley F. Staples, Jr.
/s/ Sister Thomas Welder Director March 2, 1995 Sister Thomas Welder EXHIBIT INDEX
Exhibit No. 3(a) Composite Certificate of Incorporation of MDU Resources Group, Inc., as amended to date. . . . . . . . . . . . . . . . . . . . ** 3(b) By-laws of MDU Resources Group, Inc., as amended to date . . . . . . . . . . . . . . ** 4(a) Indenture of Mortgage, dated as of May 1, 1939, as restated in the Forty-Fifth Supplemental Indenture, dated as of April 21, 1992, and the Forty-Sixth through Forty- Eighth Supplements thereto between the Company and the New York Trust Company (The Bank of New York, successor Corporate Trustee) and A. C. Downing (W. T. Cunningham, successor Co-Trustee), filed as Exhibit 4(a) in Registration No. 33-66682; and Exhibits 4(e), 4(f) and 4(g) in Registration No. 33-53896. . . . . . . . . . . * + 10(a) Management Incentive Compensative Plan, filed as Exhibit 10(a) in Registration No. 33-66682 . . . . . . . . . . . . . . . . . * + 10(b) 1992 Key Employee Stock Option Plan, filed as Exhibit 10(f) in Registration No. 33-66682 . . . . . . . . . . . . . . . . . * + 10(c) Restricted Stock Bonus Plan, filed as Exhibit 10(b) in Registration No. 33-66682 . . . . . . . . . . . . . . . . . * + 10(d) Supplemental Income Security Plan, as amended to date. . . . . . . . . . . . . . . . ** + 10(e) Directors' Compensation Policy, filed as Exhibit 10(d) in Registration No. 33-66682 . . . . . . . . . . . . . . . . . * + 10(f) Deferred Compensation Plan for Directors, filed as Exhibit 10(e) in Registration No. 33-66682 . . . . . . . . . . . . . . . . . * 13 Selected financial data, financial statements and supplementary data contained in the Annual Report to Stockholders for 1994. . . . . . . . . . . . . ** 21 Subsidiaries of MDU Resources Group, Inc.. . . ** 23(a) Consent of Independent Public Accountants. . . ** 23(b) Consent of Engineer. . . . . . . . . . . . . . ** 23(c) Consent of Engineer. . . . . . . . . . . . . . ** 27 Financial Data Schedule. . . . . . . . . . . . **
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* Incorporated herein by reference as indicated. ** Filed herewith. + Management contract, compensatory plan or arrangement required to be filed as an exhibit to this form pursuant to Item 14(c) of this report.