FORM 10-K
92
MDU RESOURCES G ROUP, INC.
PART II
A summary of the status of the restricted stock awards for the year ended December 31, 2007, was as follows:
Weighted
Average
Number of
Grant-Date
Shares
Fair Value
Nonvested at beginning of period
32,117
$13.22
Vested
--
--
Forfeited
(5,384)
13.22
Nonvested at end of period
26,733
$13.22
The fair value of restricted stock awards that vested during the year ended December 31, 2006, was $1.8 million.
Stock awards
Nonemployee directors may receive shares of common stock instead of cash in payment for directors' fees under the nonemployee director
stock compensation plan. There were 48,228 shares with a fair value of $1.5 million and 50,627 shares with a fair value of $1.3 million
issued under this plan during the years ended December 31, 2007 and 2006, respectively.
Performance share awards
Since 2003, key employees of the Company have been awarded performance share awards each year. Entitlement to performance shares
is based on the Company's total shareholder return over designated performance periods as measured against a selected peer group.
Target grants of performance shares outstanding at December 31, 2007, were as follows:
Target Grant
Grant Date
Performance Period
of Shares
February 2005
20052007
256,081
February 2006
20062008
184,000
February 2007
20072009
184,418
Participants may earn from zero to 200 percent of the target grant of shares based on the Company's total shareholder return relative to
that of the selected peer group. Compensation expense is based on the grant-date fair value. The grant-date fair value of performance
share awards granted during the years ended December 31, 2007, 2006 and 2005, was $23.55, $25.22 and $18.36, per share,
respectively. The grant-date fair value for the performance shares granted in 2007 and 2006 was determined by Monte Carlo simulation
using a blended volatility term structure comprised of 50 percent historical volatility and 50 percent implied volatility and a risk-free interest
rate term structure based on U.S. Treasury security rates in effect as of the grant date. In addition, the mean over all simulation paths of the
discounted dividends expected to be earned in the performance period used in the valuation was $1.25 and $1.37 per target share for the
2007 and 2006 awards, respectively. The grant-date fair value for the performance shares issued in 2005 was equal to the market value of
the common stock on the grant date. The fair value of performance share awards that vested during the years ended December 31, 2007
and 2006, was $6.0 million and $2.2 million, respectively.
A summary of the status of the performance share awards for the year ended December 31, 2007, was as follows:
Weighted
Average
Number of
Grant-Date
Shares
Fair Value
Nonvested at beginning of period
738,684
$19.27
Granted
200,395
23.55
Vested
(228,452)
15.81
Forfeited
(86,128)
19.26
Nonvested at end of period
624,499
$21.91
NOTE 15 -- INCOME TAXES
The components of income before income taxes for each of the years ended December 31 were as follows:
2007
2006
2005
(In thousands)
United States
$508,210
$469,741
$397,703
Foreign
4,600
4,148
13,837
Income before income taxes
$512,810
$473,889
$411,540
