UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-00248
---------------------------------------------
THE ADAMS EXPRESS COMPANY
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(Exact name of registrant as specified in charter)
7 Saint Paul Street, Suite 1140, Baltimore, Maryland 21202
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(Address of principal executive offices) (Zip code)
Lawrence L. Hooper, Jr.
The Adams Express Company
7 Saint Paul Street
Suite 1140
Baltimore, Maryland 21202
Registrant's telephone number, including area code: 410-752-5900
Date of fiscal year end: December 31, 2007
Date of reporting period: June 30, 2007
Item 1: Reports to Stockholders.
THE ADAMS EXPRESS COMPANY
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Board of Directors
Enrique R. Arzac /1,4,5/ Thomas H. Lenagh /2,3/
Phyllis O. Bonanno /1,4,5/ Kathleen T. McGahran /2,4/
Daniel E. Emerson/ 1,3,5/ Douglas G. Ober/ 1/
Frederic A. Escherich /2,3/ Craig R. Smith /2,4/
Roger W. Gale /1,3,5/
1.Member of Executive Committee
2.Member of Audit Committee
3.Member of Compensation Committee
4.Member of Retirement Benefits Committee
5.Member of Nominating and Governance Committee
Officers
Douglas G. Ober Chairman and
Chief Executive Officer
Joseph M. Truta President
Lawrence L. Hooper, Jr. Vice President, General
Counsel and Secretary
Maureen A. Jones Vice President,
Chief Financial Officer
and Treasurer
Stephen E. Kohler Vice President--Research
David R. Schiminger Vice President--Research
D. Cotton Swindell Vice President--Research
David D. Weaver Vice President--Research
Christine M. Sloan Assistant Treasurer
Geraldine H. Pare Assistant Secretary
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Stock Data
--------
Market Price (6/30/07) $14.89
Net Asset Value (6/30/07) $17.06
Discount: 12.7%
New York Stock Exchange ticker symbol: ADX
NASDAQ Mutual Fund Quotation Symbol: XADEX
Newspaper stock listings are generally under the abbreviation: AdaEx
----------------
Distributions in 2007
----------------
From Investment Income (paid or declared) $0.14
From Net Realized Gains 0.01
-----
Total $0.15
=====
----------------------
2007 Dividend Payment Dates
----------------------
March 1, 2007
June 1, 2007
September 1, 2007
December 27, 2007*
*Anticipated
The Adams Express Company
Semi-Annual Report
June 30, 2007
Generation after generation
we grow with you/tm
INVEST/PROTECT/GROW
[GRAPHIC]
LETTER TO STOCKHOLDERS
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We submit herewith the financial statements of The Adams Express Company (the
Company) for the six months ended June 30, 2007. Also provided are the report
of the independent registered public accounting firm, a schedule of
investments, and other summary financial information.
Net assets of the Company at June 30, 2007 were $17.06 per share on 85,893,132
shares outstanding, compared with $15.86 per share at December 31, 2006 on
86,838,223 shares outstanding. On March 1, 2007, a distribution of $0.05 per
share was paid, consisting of $0.03 from 2006 investment income, $0.01 from
2006 short-term capital gain, and $0.01 from 2007 investment income, all
taxable in 2007. A 2007 invest-ment income dividend of $0.05 per share was paid
on June 1, 2007, and another $0.05 per share investment income dividend has
been declared to shareholders of record August 14, 2007, payable September 1,
2007.
Net investment income for the six months ended June 30, 2007 amounted to
$16,387,719, compared with $8,966,520 for the same period in 2006. These
earnings are equal to $0.19 and $0.11 per share.
Net capital gain realized on investments for the six months ended June 30, 2007
amounted to $35,958,118, or $0.42 per share.
The total return on the net asset value (with dividends and capital gains
reinvested) of the Company's shares was 8.3% for the six months ended June 30,
2007. The total return on the market value of the Company's shares in the
period was 8.1%. These compare to a 7.0% total return for the Standard & Poor's
500 Composite Stock Index and a 6.9% total return for the Lipper Large Cap Core
Mutual Fund Average over the same time period.
For the twelve months ended June 30, 2007, the Company's total return on net
asset value was 20.3% and on market value was 23.3%, as the discount narrowed
during the period. Comparable figures for the S&P 500 and the Lipper Large Cap
Core Mutual Fund Average were 20.6% and 19.6%, respectively.
In June 2007, the Board of Directors of the Company adopted Amended and
Restated Bylaws for the Company. Further information may be found on page 16 of
this report.
Current and potential stockholders can find information about the Company,
including the daily net asset value (NAV) per share, the market price, and the
discount/premium to the NAV, on our website at www.adamsexpress.com. Also
available on the website are a history of the Company, historical financial
information, and other useful content. Further information regarding
stockholder services is located on page 18 of this report.
-----------------
By order of the Board of Directors,
/s/
Douglas G. Ober,
Chairman and
Chief Executive Officer
/s/ Joseph M. Truta
Joseph M. Truta,
President
July 13, 2007
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
June 30, 2007
Assets
Investments* at value:
Common stocks and convertible securities
(cost $893,749,645) $1,320,403,289
Non-controlled affiliate, Petroleum & Resources Corporation
(cost $34,735,404) 84,453,212
Short-term investments (cost $56,042,573) 56,042,573
Securities lending collateral (cost $51,790,258) 51,790,258 $1,512,689,332
------------------------------------------------------------------------------------------------
Cash 394,141
Investment securities sold 1,279,753
Dividends and interest receivable 1,254,791
Prepaid pension cost 3,384,802
Prepaid expenses and other assets 2,305,143
---------------------------------------------------------------------------------------------------------------
Total Assets 1,521,307,962
---------------------------------------------------------------------------------------------------------------
Liabilities
Investment securities purchased 349,156
Open written option contracts at value (proceeds $522,629) 613,325
Obligations to return securities lending collateral 51,790,258
Accrued expenses 3,305,316
---------------------------------------------------------------------------------------------------------------
Total Liabilities 56,058,055
---------------------------------------------------------------------------------------------------------------
Net Assets $1,465,249,907
---------------------------------------------------------------------------------------------------------------
Net Assets
Common Stock at par value $0.001 per share, authorized 150,000,000 shares;
issued and outstanding 85,893,132 shares (includes 86,867 restricted
shares, 6,000 restricted stock units, and 4,112 deferred stock units) (Note 6) $ 85,893
Additional capital surplus 940,985,075
Accumulated other comprehensive income (Note 5) (1,716,072)
Undistributed net investment income 13,257,872
Undistributed net realized gain on investments 36,356,383
Unrealized appreciation on investments 476,280,756
---------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Stock $1,465,249,907
---------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share of Common Stock $17.06
---------------------------------------------------------------------------------------------------------------
* See Schedule of Investments on pages 9 and 10.
The accompanying notes are an integral part of the financial statements.
2
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
Six Months Ended June 30, 2007
Investment Income
Income:
Dividends:
From unaffiliated issuers $ 17,571,283
From non-controlled affiliate 415,487
Interest and other income 1,669,448
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Total income 19,656,218
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Expenses:
Investment research 1,478,739
Administration and operations 726,243
Directors' fees 172,626
Reports and stockholder communications 195,593
Transfer agent, registrar and custodian expenses 171,863
Auditing and accounting services 61,351
Legal services 67,968
Occupancy and other office expenses 231,935
Travel, telephone and postage 48,160
Other 114,021
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Total expenses 3,268,499
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Net Investment Income 16,387,719
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Realized Gain and Change in Unrealized Appreciation on Investments
Net realized gain on security transactions 35,805,044
Net realized gain distributed by regulated investment company (non-controlled affiliate) 153,074
Change in unrealized appreciation on investments 57,524,500
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Net Gain on Investments 93,482,618
-------------------------------------------------------------------------------------------------------
Change in Net Assets Resulting from Operations $109,870,337
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The accompanying notes are an integral part of the financial statements.
3
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
Six Months Ended Year Ended
June 30, 2007 December 31, 2006
---------------- -----------------
From Operations:
Net investment income $ 16,387,719 $ 19,691,488
Net realized gain on investments 35,958,118 56,553,881
Change in unrealized appreciation on investments 57,524,500 102,278,889
Change in accumulated other comprehensive income (note 5) 108,033 (1,824,105)
----------------------------------------------------------------------------------------------
Change in net assets resulting from operations 109,978,370 176,700,153
----------------------------------------------------------------------------------------------
Distributions to Stockholders from:
Net investment income (7,762,435) (19,554,259)
Net realized gain from investment transactions (868,719) (56,771,240)
----------------------------------------------------------------------------------------------
Decrease in net assets from distributions (8,631,154) (76,325,499)
----------------------------------------------------------------------------------------------
From Capital Share Transactions:
Value of shares issued in payment of distributions 3,761 31,661,698
Cost of shares purchased (Note 4) (13,843,891) (21,770,315)
Deferred compensation (Notes 4,6) 324,511 423,621
----------------------------------------------------------------------------------------------
Change in net assets from capital share transactions (13,515,619) 10,315,004
----------------------------------------------------------------------------------------------
Total Increase in Net Assets 87,831,597 110,689,658
Net Assets:
Beginning of period 1,377,418,310 1,266,728,652
----------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $13,257,872 and $4,632,588, respectively) $1,465,249,907 $1,377,418,310
----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
4
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. Significant Accounting Policies
The Adams Express Company (the Company) is registered under the Investment
Company Act of 1940 as a diversified investment company. The Company is an
internally-managed fund whose investment objectives are preservation of
capital, the attainment of reasonable income from investments, and an
opportunity for capital appreciation.
Security Valuation -- Investments in securities traded on a national security
exchange are valued at the last reported sale price on the day of valuation.
Over-the-counter and listed securities for which a sale price is not available
are valued at the last quoted bid price. Short-term investments (excluding
purchased options) are valued at amortized cost. Purchased and written options
are valued at the last quoted asked price.
Affiliated Companies -- Investments in companies 5% or more of whose
outstanding voting securities are held by the Company are defined as
"Affiliated Companies" in Section 2(a)(3) of the Investment Company Act of 1940.
Security Transactions and Investment Income -- Investment transactions are
accounted for on the trade date. Gain or loss on sales of securities and
options is determined on the basis of identified cost. Dividend income and
distributions to stockholders are recognized on the ex-dividend date, and
interest income is recognized on the accrual basis.
2. Federal Income Taxes
The Company's policy is to distribute all of its taxable income to its
stockholders in compliance with the requirements of the Internal Revenue Code
applicable to regulated investment companies. Therefore, no federal income tax
provision is required. For federal income tax purposes, the identified cost of
securities at June 30, 2007 was $1,035,830,629 and net unrealized appreciation
aggregated $476,858,703, of which the related gross unrealized appreciation and
depreciation were $530,588,714 and $53,730,011, respectively.
Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. Accordingly, annual
reclassifications are made within the Company's capital accounts to reflect
income and gains available for distribution under income tax regulations. Any
income tax-related interest or penalties would be classified as income tax
expense.
Effective June 29, 2007, the Company adopted Financial Accounting Standards
Board (FASB) Interpretation No. 48 (FIN 48), Accounting for Uncertainty in
Income Taxes, a clarification of FASB Statement No. 109, Accounting for Income
Taxes. FIN 48 establishes financial reporting rules regarding recognition and
measurement of tax positions taken or expected to be taken on a tax return. The
adoption of FIN 48 had no impact on the Company's net assets or results of
operations.
3. Investment Transactions
The Company's investment decisions are made by a committee of management, and
recommendations to that committee are made by the research staff.
Purchases and sales of portfolio securities, other than options and short-term
investments, during the six months ended June 30, 2007 were $93,154,357 and
$89,051,906, respectively. Options may be written (sold) or purchased by the
Company. The Company, as writer of an option, bears the risks of possible
illiquidity of the option markets and from movements in security values. The
risk associated with purchasing an option is limited to the premium originally
paid. A schedule of outstanding option contracts as of June 30, 2007 can be
found on page 12.
Transactions in written covered call and collateralized put options during the
six months ended June 30, 2007 were as follows:
Covered Calls Collateralized Puts
------------------- -------------------
Contracts Premiums Contracts Premiums
--------- --------- --------- ---------
Options outstanding,
December 31, 2006 3,745 $ 497,618 2,103 $ 220,313
Options written 3,690 465,727 3,035 327,642
Options terminated in
closing purchase
transactions (550) (83,598) -- --
Options expired (2,395) (293,125) (2,853) (310,810)
Options exercised (2,100) (301,138) -- --
---------------------------------------------------------------
Options outstanding,
June 30, 2007 2,390 $ 285,484 2,285 $ 237,145
---------------------------------------------------------------
4. Capital Stock
The Company has 10,000,000 authorized and unissued preferred shares, $0.001 par
value.
On December 27, 2006, the Company issued 2,301,959 shares of its Common Stock
at a price of $13.75 per share (the average market price on December 11, 2006)
to stockholders of record on November 21, 2006 who elected to take stock in
payment of the year-end distribution from 2006 capital gain and investment
income. In addition, 722 shares were issued at a weighted average price of
$13.43 per share as dividend equivalents to holders of deferred stock units and
restricted stock units under the 2005 Equity Incentive Compensation Plan.
During 2007, the Company has issued 267 shares of its Common Stock at a
weighted average price of $14.02 per share as dividend equivalents to holders
of deferred stock units and restricted stock units under the 2005 Equity
Incentive Compensation Plan.
The Company may purchase shares of its Common Stock from time to time at such
prices and amounts as the Board of Directors may deem advisable.
Transactions in Common Stock for 2007 and 2006 were as follows:
Shares Amount
---------------------- --------------------------
Six months Six months
ended Year ended ended Year ended
June 30, December 31, June 30, December 31,
2007 2006 2007 2006
---------- ------------ ------------ ------------
Shares issued in
payment of
distributions 267 2,302,681 $ 3,761 $ 31,661,698
Shares purchased (at a
weighted average
discount from net
asset value of 13.2%
and 13.9%,
respectively) (989,124) (1,623,542) (13,843,891) (21,770,315)
Net activity under the
Equity-Based
Compensation Plans 43,766 59,477 324,511 423,621
--------------------------------------------------------------------------
Net change (945,091) 738,616 $(13,515,619) $ 10,315,004
--------------------------------------------------------------------------
5
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
5. Retirement Plans
The Company's non-contributory qualified defined benefit pension plan covers
all employees with at least one year of service. In addition, the Company has a
non-contributory nonqualified defined benefit plan which provides eligible
employees with retirement benefits to supplement the qualified plan. Benefits
are based on length of service and compensation during the last five years of
employment.
The funded status of the plans is recognized as an asset (overfunded plan) or a
liability (underfunded plan) in the Statement of Assets and Liabilities.
Changes in the prior service costs and accumulated actuarial gains and losses
are recognized as accumulated other comprehensive income, a component of net
assets, in the year in which the changes occur.
The Company's policy is to contribute annually to the plans those amounts that
can be deducted for federal income tax purposes, plus additional amounts as the
Company deems appropriate in order to provide assets sufficient to meet
benefits to be paid to plan participants. During the six months ended June 30,
2007, the Company did not contribute to the plans. The Company does not
anticipate making any contribution to the overfunded plan in 2007.
The following table aggregates the components of the plans' net periodic
pension cost:
Six months
ended Year ended
June 30, December 31,
2007 2006
---------- ------------
Service cost $ 243,658 $ 460,969
Interest cost 284,247 518,015
Expected return on plan assets (427,777) (922,155)
Amortization of prior service cost 47,254 119,776
Amortization of net loss 81,313 180,764
Deferred asset gain -- 128,119
----------------------------------------------------------
Net periodic pension cost $ 228,695 $ 485,488
----------------------------------------------------------
The Company also sponsors a defined contribution plan that covers substantially
all employees. For the six months ended June 30, 2007, the Company expensed
contributions of $95,309. The Company does not provide postretirement medical
benefits.
6. Equity-Based Compensation
Although the Stock Option Plan of 1985 ("1985 Plan") has been discontinued and
no further grants will be made under this plan, unexercised grants of stock
options and stock appreciation rights granted in 2004 and prior years remain
outstanding. The exercise price of the unexercised options and related stock
appreciation rights is the fair market value on date of grant, reduced by the
per share amount of capital gains paid by the Company during subsequent years.
All options and related stock appreciation rights terminate 10 years from date
of grant, if not exercised.
A summary of option activity under the 1985 Plan as of June 30, 2007, and
changes during the six month period then ended, is presented below:
Weighted- Weighted-
Average Average
Exercise Remaining
Options Price Life (Years)
------- --------- ------------
Outstanding at December 31, 2006 201,990 $11.81 4.79
Exercised (55,186) 10.38 --
----------------------------------------------------------------
Outstanding at June 30, 2007 146,804 $12.33 3.97
----------------------------------------------------------------
Exercisable at June 30, 2007 80,282 $12.86 3.25
----------------------------------------------------------------
The options outstanding as of June 30, 2007 are set forth below:
Weighted Weighted
Average Average
Options Exercise Remaining
Exercise Price Outstanding Price Life (Years)
-------------- ----------- -------- ------------
$8.25-$10.49 42,817 $ 9.25 3.64
$10.50-$12.74 52,839 11.02 5.10
$12.75-$14.99 -- -- --
$15.00-$17.25 51,148 16.28 3.09
--------------------------------------------------------------
Outstanding at June 30, 2007 146,804 $12.33 3.97
--------------------------------------------------------------
Compensation cost resulting from stock options and stock appreciation rights
granted under the 1985 Plan is based on the intrinsic value of the award,
recognized over the award's vesting period, and remeasured at each reporting
date through the date of settlement. The total compensation cost recognized for
the six months ended June 30, 2007 was $115,897.
The 2005 Equity Incentive Compensation Plan ("2005 Plan"), adopted at the 2005
Annual Meeting, permits the grant of stock options, restricted stock awards and
other stock incentives to key employees and all non-employee directors. The
2005 Plan provides for the issuance of up to 3,413,131 shares of the Company's
Common Stock, including both performance and nonperformance-based restricted
stock. Performance-based restricted stock awards vest at the end of a specified
three year period, with the ultimate number of awards earned contingent on
achievement of certain performance targets. If performance targets are not
achieved, all or a portion of the performance-based awards are forfeited and
become available for future grants. Nonperformance-based restricted stock
awards vest ratably over a three year period and nonperformance-based
restricted stock units (granted to non-employee directors) vest over a one year
period. It is the current intention that employee grants will be
performance-based. The 2005 Plan provides for accelerated vesting in the event
of death or retirement. Non-employee directors also may elect to defer a
portion of their cash compensation, with such deferred amount to be paid by
delivery of deferred stock units. Outstanding awards are granted at fair market
value on grant date. The number of shares of Common Stock which remains
available for future grants under the 2005 Plan at June 30, 2007 is 3,289,337
shares.
The Company pays dividends and dividend equivalents on outstanding awards,
which are charged to net assets when paid. Dividends and dividend equivalents
paid on restricted awards that are later forfeited are reclassified to
compensation expense.
A summary of the status of the Company's awards granted under the 2005 Plan as
of June 30, 2007, and changes during the six month period then ended, is
presented below:
Weighted
Average
Shares/ Grant-Date
Awards Units Fair Value
------ ------- ----------
Balance at December 31, 2006 70,493 $12.92
Granted:
Restricted stock 32,720 13.73
Restricted stock units 6,000 14.07
Deferred stock units 963 13.90
Vested (13,197) 12.99
Forfeited -- --
-------------------------------------------------------------
Balance at June 30, 2007 (includes 82,220
performance-based awards and 14,759
nonperformance-based awards) 96,979 $13.13
-------------------------------------------------------------
6
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
Compensation costs resulting from awards granted under the 2005 Plan are based
on the fair value of the award on grant date (determined by the average of the
high and low price on grant date) and recognized on a straight-line basis over
the requisite service period. For those awards with performance conditions,
compensation costs are based on the most probable outcome and, if such goals
are not met, compensation cost is not recognized and any previously recognized
compensation cost is reversed. The total compensation costs for restricted
stock granted to employees for the period ending June 30, 2007 were $209,452.
The total compensation costs for restricted stock units granted to non-employee
directors for the period ended June 30, 2007 were $44,876. As of June 30, 2007,
there were total unrecognized compensation costs of $807,143, a component of
additional capital surplus, related to nonvested equity-based compensation
arrangements granted under the 2005 Plan. Those costs are expected to be
recognized over a weighted average period of 1.87 years.
7. Officer and Director Compensation
The aggregate remuneration paid during the six months ended June 30, 2007 to
officers and directors amounted to $2,080,502, of which $185,041 was paid as
fees and compensation to directors who were not officers. These amounts
represent the taxable income to the Company's officers and directors and
therefore differ from the amounts reported in the accompanying Statement of
Operations that are recorded and expensed in accordance with generally accepted
accounting principles.
8. Portfolio Securities Loaned
The Company makes loans of securities to brokers, secured by cash deposits,
U.S. Government securities, or bank letters of credit. The Company accounts for
securities lending transactions as secured financing and receives compensation
in the form of fees or retains a portion of interest on the investment of any
cash received as collateral. The Company also continues to receive interest or
dividends on the securities loaned. The loans are secured at all times by
collateral of at least 102% of the fair value of the securities loaned plus
accrued interest. Gain or loss in the fair value of the securities loaned that
may occur during the term of the loan will be for the account of the Company.
At June 30, 2007, the Company had securities on loan of $50,590,515 and held
collateral of $51,790,258, consisting of an investment trust fund which may
invest in money market instruments, commercial paper, repurchase agreements,
U.S. Treasury Bills, and U.S. agency obligations.
7
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
------------------------
Six Months Ended
----------------------
Year Ended December 31
June 30, June 30, ------------------------------------------------------
2007 2006 2006 2005 2004 2003 2002
---------- ---------- ---------- ---------- ---------- ---------- ----------
Per Share Operating Performance
Net asset value, beginning of period $15.86 $14.71 $14.71 $15.04 $14.36 $12.12 $16.05
--------------------------------------------------------------------------------------------------------------------
Net investment income 0.19* 0.11 0.23 0.22 0.23** 0.19 0.20
Net realized gains and increase
(decrease) in unrealized
appreciation 1.09 0.37 1.86 0.32 1.39 2.85 (3.38)
Change in accumulated other
comprehensive income
(note 5) -- -- (0.02) -- -- -- --
--------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.28 0.48 2.07 0.54 1.62 3.04 (3.18)
--------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends from net investment
income (0.09) (0.08) (0.23) (0.22) (0.24) (0.17) (0.19)
Distributions from net realized
gains (0.01) (0.02) (0.67) (0.64) (0.66) (0.61) (0.57)
--------------------------------------------------------------------------------------------------------------------
Total distributions (0.10) (0.10) (0.90) (0.86) (0.90) (0.78) (0.76)
--------------------------------------------------------------------------------------------------------------------
Capital share repurchases 0.02 0.03 0.04 0.05 0.02 0.04 0.05
Reinvestment of distributions -- -- (0.06) (0.06) (0.06) (0.06) (0.04)
--------------------------------------------------------------------------------------------------------------------
Total capital share transactions 0.02 0.03 (0.02) (0.01) (0.04) (0.02) 0.01
--------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.06 $15.12 $15.86 $14.71 $15.04 $14.36 $12.12
--------------------------------------------------------------------------------------------------------------------
Per share market price, end
of period $14.89 $12.87 $13.87 $12.55 $13.12 $12.41 $10.57
Total Investment Return
Based on market price 8.1% 3.3% 17.9% 2.2% 13.2% 25.2% (20.6)%
Based on net asset value 8.3% 3.6% 15.0% 4.5% 12.1% 26.3% (19.4)%
Ratios/Supplemental Data
Net assets, end of period
(in 000's) $1,465,250 $1,286,894 $1,377,418 $1,266,729 $1,295,549 $1,218,862 $1,024,810
Ratio of expenses to average
net assets 0.46%+ 0.47%+ 0.50% 0.45% 0.43% 0.47% 0.34%
Ratio of net investment income to
average net assets 2.31%+ 1.38%+ 1.50% 1.44% 1.54% 1.45% 1.42%
Portfolio turnover 13.11%+ 13.55%+ 10.87% 12.96% 13.43% 12.74% 17.93%
Number of shares outstanding at
end of period (in 000's) 85,893 85,117 86,838 86,100 86,135 84,886 84,536
------------------------
--------
*In April 2007 the Company received $5,100,000, or $0.06 per share, in a
special cash dividend from Dean Foods Co.
**In 2004 the Company received $2,400,000, or $0.03 per share, in an
extraordinary dividend from Microsoft Corp.
+Ratios presented on an annualized basis.
8
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
June 30, 2007
Shares Value (A)
- --------- ------------
Stocks and Convertible Securities -- 95.9%
Consumer -- 16.6%
Consumer Discretionary -- 7.1%
BJ's Wholesale Club, Inc. (B) 450,000 $ 16,213,500
Comcast Corp. (B) 525,000 14,763,000
Gannett Co., Inc. 112,500 6,181,875
Harley-Davidson, Inc. (C) 120,000 7,153,200
Lowe's Companies, Inc. 575,000 17,646,750
Newell Rubbermaid Inc. 400,000 11,772,000
Ryland Group Inc. (C) 305,000 11,397,850
Target Corp. 290,000 18,444,000
------------
103,572,175
------------
Consumer Staples -- 9.5%
Avon Products, Inc. 418,400 15,376,200
Bunge Ltd. 140,000 11,830,000
Coca-Cola Co. 200,000 10,462,000
Dean Foods Co. 340,000 10,835,800
Del Monte Foods Co. 1,115,000 13,558,400
PepsiCo, Inc. 400,000 25,940,000
Procter & Gamble Co. 340,000 20,804,600
Safeway Inc. 390,000 13,271,700
Unilever plc ADR 550,000 17,743,000
------------
139,821,700
------------
Energy -- 13.1%
ConocoPhillips 345,000 27,082,500
ENSCO International, Inc. 209,150 12,760,242
Exxon Mobil Corp. 215,000 18,034,200
Marathon Oil Co. 240,000 14,390,400
Murphy Oil Corp. 38,500 2,288,440
Petroleum & Resources
Corporation (D) 2,186,774 84,453,212
Schlumberger Ltd. 380,000 32,277,200
------------
191,286,194
------------
Financials -- 16.4%
Banking -- 12.8%
BankAtlantic Bancorp, Inc. 880,000 7,576,800
Bank of America Corp. 610,000 29,822,900
Bank of New York Co., Inc.
(The) 375,000 15,540,000
Compass Bancshares Inc. 85,000 5,863,300
Fifth Third Bancorp 280,000 11,135,600
Investors Financial Services
Corp. 357,500 22,047,024
Morgan Stanley 150,000 12,582,000
PNC Financial Services Group
Inc. 200,000 14,316,000
Prosperity Bancshares, Inc. 200,000 6,552,000
Wachovia Corp. 470,000 24,087,500
Wells Fargo & Co. 650,000 22,860,500
Wilmington Trust Corp. 363,000 15,068,130
------------
187,451,754
------------
Shares Value (A)
- --------- ------------
Insurance -- 3.6%
AMBAC Financial Group, Inc. 200,000 $ 17,438,000
American International Group,
Inc. 500,000 35,015,000
------------
52,453,000
------------
Health Care -- 12.1%
Abbott Laboratories 320,000 17,136,000
Advanced Medical Optics,
Inc. (B)(C) 325,000 11,336,000
Bristol-Myers Squibb Co. 345,000 10,888,200
CVS/Caremark Corp. 208,750 7,608,938
Genentech, Inc. (B) 220,000 16,645,200
Johnson & Johnson 255,000 15,713,100
Medtronic, Inc. 310,000 16,076,600
Pfizer Inc. 1,120,000 28,638,400
Senomyx, Inc. (B)(C) 550,000 7,425,000
Teva Pharmaceutical Industries
Ltd. ADR 385,000 15,881,250
Wyeth Co. 325,000 18,635,500
Zimmer Holdings, Inc. (B) 125,000 10,611,250
------------
176,595,438
------------
Industrials -- 14.2%
Cintas Corp. 300,000 11,829,000
Curtiss-Wright Corp. 360,000 16,779,600
Emerson Electric Co. 400,000 18,720,000
General Electric Co. 1,487,700 56,949,156
Illinois Tool Works Inc. 250,000 13,547,500
Masco Corp. 450,000 12,811,500
Oshkosh Truck Corp. 270,000 16,988,400
3M Co. 160,000 13,886,400
Spirit AeroSystems Holdings,
Inc. (B) 395,000 14,239,750
United Parcel Service, Inc. 155,000 11,315,000
United Technologies Corp. 300,000 21,279,000
------------
208,345,306
------------
Information Technology -- 12.7%
Communication Equipment -- 1.6%
Avaya Inc. (B) 600,000 10,104,000
Corning Inc. (B) 500,000 12,775,000
------------
22,879,000
------------
Computer Related -- 8.3%
Automatic Data Processing Inc. 300,000 14,541,000
BEA Systems, Inc. (B) 800,000 10,952,000
Cisco Systems, Inc. (B) 850,000 23,672,500
Dell Inc. (B) 585,000 16,701,750
Microsoft Corp. 1,180,000 34,774,600
Oracle Corp. (B) 1,100,000 21,681,000
------------
122,322,850
------------
Electronics -- 2.8%
Broadcom Corp. (B) 400,000 11,700,000
Cree, Inc. (B)(C) 375,000 9,693,750
Intel Corp. 800,000 19,008,000
------------
40,401,750
------------
9
SCHEDULE OF INVESTMENTS (CONTINUED)
--------------------------------------------------------------------------------
June 30, 2007
Shares Value (A)
- ------- --------------
Materials -- 4.9%
Air Products and Chemicals, Inc. 230,000 $ 18,485,100
du Pont (E.I.) de Nemours
and Co. 360,000 18,302,400
Florida Rock Industries Inc. 200,000 13,500,000
Rohm & Haas Co. 400,000 21,872,000
--------------
72,159,500
--------------
Telecom Services -- 2.8%
Alltel Corp. 300,000 20,265,000
AT&T Corp. 400,000 16,600,000
Windstream Corp. 310,178 4,578,227
--------------
41,443,227
--------------
Utilities -- 3.1%
Aqua America, Inc. (C) 499,000 11,222,510
Duke Energy Corp. 611,560 11,191,548
MDU Resources Group, Inc. 562,500 15,772,500
Spectra Energy Corp. 305,780 7,938,049
--------------
46,124,607
--------------
Total Stocks and Convertible Securities
(Cost $928,485,049) (E) $1,404,856,501
--------------
Prin. Amt. Value (A)
- ----------- --------------
Short-Term Investments -- 3.8%
U.S. Government Obligations -- 1.1%
U.S. Treasury Bills,
4.70%, due 8/16/07 $16,500,000 $ 16,400,908
--------------
Time Deposit -- 0.0%
Bank of America Corp.,
4.64%, due 7/2/07 206,900
--------------
Commercial Paper -- 2.7%
AIG Funding Inc.,
5.25%, due 7/5/07 5,400,000 5,396,850
American General Finance,
Inc., 5.26%, due 7/10/07 5,000,000 4,993,431
Chevron Funding Corp.,
5.21%, due 7/17/07 6,000,000 5,986,107
General Electric Capital
Corp., 5.23-5.24%, due
7/5/07-7/19/07 11,500,000 11,476,108
Toyota Motor Credit Corp.,
5.21-5.23%, due 7/3/07-
7/24/07 11,600,000 11,582,269
--------------
39,434,765
--------------
Total Short-Term Investments
(Cost $56,042,573) 56,042,573
--------------
Total Securities Lending Collateral -- 3.5%
(Cost $51,790,258)
Brown Brothers Investment
Trust, 5.28%, due 7/2/07 51,790,258
--------------
Total Investments -- 103.2%
(Cost $1,036,317,880) 1,512,689,332
Cash, receivables, prepaid pension cost,
prepaid expenses and other assets, less
liabilities -- (3.2)% (47,439,426)
--------------
Net Assets -- 100% $1,465,249,907
==============
--------------------------------------------------------------------------------
Notes:
(A)See note 1 to financial statements. Securities are listed on the New York
Stock Exchange, the American Stock Exchange or the NASDAQ.
(B)Presently non-dividend paying.
(C)Some of the shares of this company are on loan. See note 8 to financial
statements.
(D)Non-controlled affiliate, a closed-end sector fund, registered as an
investment company under the Investment Company Act of 1940.
(E)The aggregate market value of stocks held in escrow at June 30, 2007
covering open call option contracts written was $12,388,240. In addition,
the aggregate market value of securities segregated by the Company's
custodian required to collateralize open put option contracts written was
$10,952,500.
10
PORTFOLIO SUMMARY
--------------------------------------------------------------------------------
June 30, 2007
(unaudited)
Ten Largest Portfolio Holdings
Market Value % of Net Assets
- ------------ ---------------
Petroleum & Resources Corporation* $ 84,453,212 5.8
General Electric Co. 56,949,156 3.9
American International Group, Inc. 35,015,000 2.4
Microsoft Corp. 34,774,600 2.4
Schlumberger Ltd. 32,277,200 2.2
Bank of America Corp. 29,822,900 2.0
Pfizer Inc. 28,638,400 2.0
ConocoPhillips 27,082,500 1.8
PepsiCo, Inc. 25,940,000 1.8
Wachovia Corp. 24,087,500 1.6
------------ ----
Total $379,040,468 25.9%
---------------------------------------------------------------
*Non-controlled affiliate
Sector Weightings
[CHART]
Consumer 16.6%
Energy 13.1%
Financials 16.4%
Health Care 12.1%
Industrials 14.2%
Information Technology 12.7%
Materials 4.9%
Telecom Services 2.8%
Utilities 3.1%
Short-Term Investments 3.8%
11
SCHEDULE OF OUTSTANDING OPTION CONTRACTS
--------------------------------------------------------------------------------
June 30, 2007
Contracts Contract
(100 shares Strike Expiration Appreciation/
each) Security Price Date (Depreciation)
-------------------------------------------------------------------------------
COVERED CALLS
100 AMBAC Financial Group, Inc. $100 Aug 07 $ 8,700
200 Avon Products, Inc. 45 Oct 07 19,399
250 BJ's Wholesale Club, Inc. 45 Dec 07 9,249
100 Bunge Ltd. 90 Jul 07 4,700
100 Bunge Ltd. 95 Oct 07 (5,200)
250* Comcast Corp. 33.38 Jul 07 24,874
100 Cree, Inc. 30 Sep 07 (300)
240 Marathon Oil Co. 62.50 Oct 07 (67,560)
100 Morgan Stanley 85 Jul 07 (2,301)
200 Rohm & Haas Co. 55 Oct 07 (22,075)
200 Ryland Group Inc. 65 Jul 07 40,399
250 Safeway Inc. 40 Sep 07 16,624
100 Target Corp. 70 Jul 07 10,949
200 Target Corp. 70 Oct 07 (6,201)
----- ---------
2,390 31,257
----- ---------
COLLATERALIZED PUTS
250 Broadcom Corp. 30 Aug 07 (23,875)
100 Exxon Mobil Corp. 65 Jul 07 11,100
250 Lowe's Companies, Inc. 30 Oct 07 (10,125)
200 Lubrizol Corp. 55 Dec 07 (78,600)
200 Lubrizol Corp. 60 Dec 07 (48,600)
250 Oshkosh Truck Corp. 45 Jul 07 17,999
150 Oshkosh Truck Corp. 50 Jul 07 14,549
100 PNC Financial Services Group Inc. 70 Aug 07 (3,300)
100 Procter & Gamble Co. 60 Oct 07 (6,300)
150 Ryland Group Inc. 37.50 Jul 07 (4,950)
35 Ryland Group Inc. 40 Jul 07 (7,455)
250 Spirit AeroSystems Holdings, Inc. 35 Oct 07 (14,145)
250 3M Corp. 70 Jul 07 31,749
----- ---------
2,285 (121,953)
----- ---------
$ (90,696)
=========
--------
*150 shares per contract.
12
CHANGES IN PORTFOLIO SECURITIES
--------------------------------------------------------------------------------
During the Three Months Ended June 30, 2007
(unaudited)
Shares
-----------------------------------------
Held
Additions Reductions June 30, 2007
--------- ---------- -------------
Broadridge Financial Solutions, Inc. 75,000/(1)/ 75,000 --
Broadcom Corp....................... 400,000 400,000
Lowe's Companies, Inc............... 575,000 575,000
Marathon Oil Co..................... 120,000/(2)/ 240,000
Ryland Group Inc.................... 170,000 305,000
Senomyx, Inc........................ 550,000 550,000
Spirit Aerosystems Holdings, Inc.... 395,000 395,000
Air Products and Chemicals, Inc..... 20,000 230,000
Aqua America, Inc................... 109,000 499,000
Avon Products, Inc.................. 11,600 418,400
BJ's Wholesale Club, Inc............ 50,000 450,000
Bunge Ltd........................... 40,000 140,000
Clear Channel Communications, Inc... 175,000 --
Compass Bancshares Inc.............. 215,000 85,000
Curtiss-Wright Corp................. 100,000 360,000
Investors Financial Services Corp... 25,000 357,500
Martin Marietta Materials, Inc...... 14,600 --
MedImmune, Inc...................... 225,000/(3)/ --
Morgan Stanley...................... 20,000 150,000
OSI Restaurant Partners, Inc........ 315,000 --
--------
/(1)/Received .25 share for each share of Automatic Data Processing Inc. held.
/(2)/By stock split.
/(3)/Received $58.00 per share through tender offer.
13
HISTORICAL FINANCIAL STATISTICS
--------------------------------------------------------------------------------
(unaudited)
Dividends Distributions Total
From From Net Dividends
Net Asset Market Investment Realized and Annual
Value Of Shares Value Per Value Income Gains Distributions Rate of
Dec. 31 Net Assets Outstanding* Share* Per Share* Per Share* Per Share* Per Share* Distribution**
------- ---------- ------------ --------- ---------- ---------- ------------- ------------- --------------
1997 $1,424,170,425 74,923,859 $19.01 $16.13 $.29 $1.01 $1.30 8.65%
1998 1,688,080,336 77,814,977 21.69 17.75 .30 1.10 1.40 8.17
1999 2,170,801,875 80,842,241 26.85 22.38 .26 1.37 1.63 8.53
2000 1,951,562,978 82,292,262 23.72 21.00 .22 1.63 1.85 7.76
2001 1,368,366,316 85,233,262 16.05 14.22 .26 1.39 1.65 9.44
2002 1,024,810,092 84,536,250 12.12 10.57 .19 .57 .76 6.14
2003 1,218,862,456 84,886,412 14.36 12.41 .17 .61 .78 6.80
2004 1,295,548,900 86,135,292 15.04 13.12 .24 .66 .90 7.05
2005 1,266,728,652 86,099,607 14.71 12.55 .22 .64 .86 6.65
2006 1,377,418,310 86,838,223 15.86 13.87 .23 .67 .90 6.80
June 30, 2007 1,465,249,907 85,893,132 17.06 14.89 .14+ .01+ .15+ --
--------
*Adjusted to reflect the 3-for-2 stock split effected in October 2000.
**The annual rate of distribution is the total dividends and capital gain
distributions during the year divided by the average daily market price of
the Company's Common Stock.
+Paid or declared.
-----------------
Common Stock
Listed on the New York Stock Exchange
The Adams Express Company
Seven St. Paul Street, Suite 1140, Baltimore, MD 21202
(410) 752-5900 or (800) 638-2479
Website: www.adamsexpress.com
E-mail: contact@adamsexpress.com
Counsel: Chadbourne & Parke L.L.P.
Independent Registered Public Accounting Firm: PricewaterhouseCoopers LLP
Transfer Agent & Registrar: American Stock Transfer & Trust Co.
Custodian of Securities: Brown Brothers Harriman & Co.
14
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
To the Board of Directors and Stockholders of
The Adams Express Company:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Adams Express Company (the
Company) at June 30, 2007, the results of its operations, the changes in its
net assets and the financial highlights for each of the fiscal periods
presented, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements 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. An audit 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, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at June 30, 2007, by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
July 13, 2007
15
AMENDED AND RESTATED BYLAWS
--------------------------------------------------------------------------------
In June 2007, the Board of Directors of the Company adopted Amended and
Restated Bylaws for the Company. Among other changes, the Amended and Restated
Bylaws:
. add procedures and informational requirements governing the calling of a
stockholder-requested special meeting of stockholders;
. add informational requirements and modify the timing for the advance
notice of stockholder nominees for the Board of Directors and of other
stockholder proposals --stockholders are now generally required to notify
the Company in writing of any proposal which they intend to present at an
annual meeting of stockholders, including any nominations for director,
between 120 and 150 days prior to the first anniversary of the mailing
date of the notice for the prior year's annual meeting of stockholders;
. implement changes to conform to the charter of the Company as recently
amended and restated by the stockholders; and
. include updates to conform to changes in Maryland law and current
corporate governance practice.
As a result of the changes to the advance notice bylaws summarized above, the
advance notice of Director nominees and any other proposals that a stockholder
seeks to bring before the 2008 Annual Meeting but does not seek to have
included in the Company's proxy statement and form of proxy for that meeting
must be received at the office of the Company no earlier than September 19,
2007, and no later than October 19, 2007. Please note that these dates are
different from those that were provided in the Company's proxy statement for
the 2007 Annual Meeting, which dates are no longer correct.
The foregoing is only a summary and is qualified in its entirety by reference
to the Amended and Restated Bylaws, a copy of which will be filed with the
Securities and Exchange Commission as an exhibit to the Company's next report
on Form NSAR. The Amended and Restated Bylaws are also available upon written
request to the Secretary of the Company.
-----------------
This report, including the financial statements herein, is transmitted to the
stockholders of The Adams Express Company for their information. It is not a
prospectus, circular or representation intended for use in the purchase or
sale of shares of the Company or of any securities mentioned in the report.
The rates of return will vary and the principal value of an investment will
fluctuate. Shares, if sold, may be worth more or less than their original
cost. Past performance is not indicative of future
investment results.
16
OTHER INFORMATION
--------------------------------------------------------------------------------
Statement on Quarterly Filing of Complete Portfolio Schedule
In addition to publishing its complete schedule of portfolio holdings in the
First and Third Quarter Reports to stockholders, the Company files its complete
schedule of portfolio holdings with the Securities and Exchange Commission for
the first and third quarters of each fiscal year on Form N-Q. The Company's
Forms N-Q are available on the Commission's website at www.sec.gov. The
Company's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room, and information on the operation of the Public Reference Room
may be obtained by calling (800) SEC-0330. The Company also posts its Forms N-Q
on its website at www.adamsexpress.com under the heading "Financial Reports".
Proxy Voting Policies and Record
A description of the policies and procedures that the Company uses to determine
how to vote proxies relating to portfolio securities owned by the Company and
information as to how the Company voted proxies relating to portfolio
securities during the 12 month period ended June 30, 2007 are available (i)
without charge, upon request, by calling the Company's toll free number at
(800) 638-2479; (ii) on the Company's website by clicking on "Corporate
Information" heading on the website; and (iii) on the Securities and Exchange
Commission's website at http//www.sec.gov.
Privacy Policy
In order to conduct its business, The Adams Express Company, through its
transfer agent, currently American Stock Transfer & Trust Company, collects and
maintains certain nonpublic personal information about our stockholders of
record with respect to their transactions in shares of our securities. This
information includes the stockholder's address, tax identification or Social
Security number, share balances, and dividend elections. We do not collect or
maintain personal information about stockholders whose shares of our securities
are held in "street name" by a financial institution such as a bank or broker.
We do not disclose any nonpublic personal information about you, our other
stockholders or our former stockholders to third parties unless necessary to
process a transaction, service an account or as otherwise permitted by law.
To protect your personal information internally, we restrict access to
nonpublic personal information about our stockholders to those employees who
need to know that information to provide services to our stockholders. We also
maintain certain other safeguards to protect your nonpublic personal
information.
17
STOCKHOLDER INFORMATION AND SERVICES
--------------------------------------------------------------------------------
DIVIDEND PAYMENT SCHEDULE
The Company presently pays dividends four times a year, as follows: (a) three
interim distributions on or about March 1, June 1, and September 1, and (b) a
"year-end" distribution, payable in late December, consisting of the estimated
balance of the net investment income for the year and the net realized capital
gain earned through October 31. Stockholders may elect to receive the year-end
distribution in stock or cash. In connection with this distribution, all
stockholders of record are sent a dividend announcement notice and an election
card in mid-November.
Stockholders holding shares in "street" or brokerage accounts may make their
election by notifying their brokerage house representative.
INVESTORS CHOICE
INVESTORS CHOICE is a direct stock purchase and sale plan, as well as a
dividend reinvestment plan, sponsored and administered by our transfer agent,
American Stock Transfer & Trust Company (AST). The Plan provides registered
stockholders and interested first time investors an affordable alternative for
buying, selling, and reinvesting in Adams Express shares.
The costs to participants in administrative service fees and brokerage
commissions for each type of transaction are listed below.
Initial Enrollment and
Optional Cash Investments
Service Fee $2.50 per investment
Brokerage Commission $0.05 per share
Reinvestment of Dividends*
Service Fee 2% of amount invested
(maximum of $2.50 per investment)
Brokerage Commission $0.05 per share
Sale of Shares
Service Fee $10.00
Brokerage Commission $0.05 per share
Deposit of Certificates for safekeeping $7.50
Book to Book Transfers Included
To transfer shares to another participant or to a new participant
Fees are subject to change at any time.
Minimum and Maximum Cash Investments
Initial minimum investment (non-holders) $500.00
Minimum optional investment
(existing holders) $50.00
Electronic Funds Transfer
(monthly minimum) $50.00
Maximum per transaction $25,000.00
Maximum per year NONE
A brochure which further details the benefits and features of INVESTORS CHOICE
as well as an enrollment form may be obtained by contacting AST.
For Non-Registered Stockholders
For stockholders whose stock is held by a broker in "street" name, the AST
INVESTORS CHOICE Direct Stock Purchase and Sale Plan remains available through
many registered investment security dealers. If your shares are currently held
in a "street" name or brokerage account, please contact your broker for details
about how you can participate in AST's Plan or contact AST.
----------
The Company
The Adams Express Company
Lawrence L. Hooper, Jr.
Vice President, General Counsel and Secretary
Seven St. Paul Street, Suite 1140, Baltimore, MD 21202
(800) 638-2479
Website: www.adamsexpress.com
E-mail: contact@adamsexpress.com
The Transfer Agent
American Stock Transfer & Trust Company
Address Stockholder Inquiries to:
Stockholder Relations Department
59 Maiden Lane
New York, NY 10038
(877) 260-8188
Website: www.amstock.com
E-mail: info@amstock.com
Investors Choice Mailing Address:
Attention: Dividend Reinvestment
P.O. Box 922
Wall Street Station
New York, NY 10269-0560
Website: www.amstock.com
E-mail: info@amstock.com
*The year-end dividend and capital gain distribution will usually be made in
newly issued shares of common stock. There are no fees or commissions in
connection with this dividend and capital gain distribution when made in newly
issued shares.
18
Item 2: Code(s) of Ethics for senior financial officers -
Item not applicable to semi-annual report.
Item 3: Audit Committee Financial Expert - Item not
applicable to semi-annual report.
Item 4: Principal Accountant Fees and Services - Item not
applicable to semi-annual report.
Item 5: Audit Committee of Listed Registrants - Item not
applicable to semi-annual report.
Item 6: Schedule of Investments - This schedule is included
as part of the report to shareholders filed under Item 1 of
this form.
Item 7: Disclosure of Proxy Voting Policies and Procedures
for Closed-End Management Investment Companies - Item not
applicable to semi-annual report.
Item 8: Portfolio Managers of Closed-End Management
Investment Companies - Item not applicable to semi-annual
report.
Item 9: Purchases of Equity Securities by Closed-End
Management Investment Company and Affiliated Purchasers.
Maximum
Total Number (or
Number of Approximate
Shares (or Dollar Value)
Total Units) of Shares (or
Number Purchased Units) that
of Average as Part of May Yet Be
Shares Price Publicly Purchased
(or Paid per Announced Under the
Units) Share (or Plans or Plans or
Period(2) Purchased Unit) Programs Programs
-------- --------- --------- --------- ---------
Jan. 2007 158,900 $ 13.83 158,900 3,927,692
Feb. 2007 236,055 $ 14.03 236,055 3,691,637
Mar. 2007 409,219 $ 13.82 409,219 3,282,418
Apr. 2007 117,050 $ 14.17 117,050 3,165,368
May 2007 0 $ 0 0 3,165,368
June 2007 67,900 $ 15.01 67,900 3,097,468
-------- --------- --------- --------- ---------
Total 989,124(1) $ 14.00 989,124(2) 3,097,468(2)
(1) There were no shares purchased other than through a
publicly announced plan or program.
(2.a) The Plan was reapproved on December 14, 2006.
(2.b) The share amount approved in 2006 was 5% of
outstanding shares, or approximately 4,235,634 shares.
(2.c) Unless reapproved, the Plan will expire on or about
December 13, 2007.
(2.d) None.
(2.e) None.
Item 10. Submission of Matters to a Vote of Security Holders.
In June 2007, Registrant's Board of Directors adopted
Amended and Restated Bylaws for the Company that, among
other changes, make material changes to the procedures by
which stockholders may recommend nominees to Registrant's
Board of Directors. In general, the changes add
informational requirements and modify the timing for the
advance notice of stockholder nominees for the Board of
Directors and of other stockholder proposals -- stockholders
are now generally required to notify the Company in writing
of any proposal which they intend to present at an annual
meeting of stockholders, including any nominations for
director, between 120 and 150 days prior to the first
anniversary of the mailing date of the notice for the prior
year's annual meeting of stockholders.
The Amended and Restated Bylaws governing the advance notice
requirements for stockholders who wish to recommend Director
nominees provide as follows:
Section 2.9. Advance Notice of Stockholder Nominees for
Director and Other Stockholder Proposals.
(a) Annual Meetings of Stockholders.
(1) Nominations of individuals for election to
the Board of Directors and the proposal of other business to
be considered by the stockholders may be made at an annual
meeting of stockholders (i) pursuant to the Corporation's
notice of meeting, (ii) by or at the direction of the Board
of Directors or (iii) by any stockholder of the Corporation
who was a stockholder of record both at the time of giving
of notice by the stockholder as provided for in this Section
2.9(a) and at the time of the annual meeting, who is
entitled to vote at the meeting and who has complied with
this Section 2.9(a).
(2) For nominations or other business to be
properly brought before an annual meeting by a stockholder
pursuant to clause (iii) of paragraph (a)(1) of this Section
2.9, the stockholder must have given timely notice thereof
in writing to the Secretary of the Corporation and such
other business must otherwise be a proper matter for action
by the stockholders. To be timely, a stockholder's notice
shall set forth all information required under this Section
2.9 and shall be delivered to the Secretary at the principal
executive office of the Corporation not earlier than the
150th day prior to the first anniversary of the Date of
Mailing of the Notice (as defined herein) for the preceding
year's annual meeting nor later than 5:00 p.m., Eastern
Time, on the 120th day prior to the first anniversary of the
Date of Mailing of the Notice for the preceding year's
annual meeting; provided, however, that in the event that
the date of the annual meeting is advanced or delayed by
more than 30 days from the first anniversary of the date of
the preceding year's annual meeting, notice by the
stockholder to be timely must be so delivered not earlier
than the 150th day prior to the date of such annual meeting
and not later than 5:00 p.m., Eastern Time, on the later of
the 120th day prior to the date of such annual meeting or
the tenth day following the day on which public announcement
of the date of such meeting is first made. The public
announcement of a postponement or adjournment of an annual
meeting shall not commence a new time period for the giving
of a stockholder's notice as described above. Such
stockholder's notice shall set forth (i) as to each
individual whom the stockholder proposes to nominate for
election or reelection as a director, (A) the name, age,
business address and residence address of such individual,
(B) the class, series and number of any shares of stock of
the Corporation that are beneficially owned by such
individual, (C) the date such shares were acquired and the
investment intent of such acquisition, (D) whether such
stockholder believes any such individual is, or is not, an
"interested person" of the Corporation, as defined in the
Investment Company Act of 1940, as amended, and the rules
promulgated thereunder (the "Investment Company Act") and
information regarding such individual that is sufficient, in
the discretion of the Board of Directors or any committee
thereof or any authorized officer of the Corporation, to
make such determination and (E) all other information
relating to such individual that is required to be disclosed
in solicitations of proxies for election of directors in an
election contest (even if an election contest is not
involved), or is otherwise required, in each case pursuant
to Regulation 14A (or any successor provision) under the
Exchange Act and the rules thereunder (including such
individual's written consent to being named in the proxy
statement as a nominee and to serving as a director if
elected); (ii) as to any other business that the stockholder
proposes to bring before the meeting, a description of such
business, the reasons for proposing such business at the
meeting and any material interest in such business of such
stockholder and any Stockholder Associated Person (as
defined below), individually or in the aggregate, including
any anticipated benefit to the stockholder and the
Stockholder Associated Person therefrom; (iii) as to the
stockholder giving the notice and any Stockholder Associated
Person, (A) the class, series and number of all shares of
stock of the Corporation which are owned by such stockholder
and by such Stockholder Associated Person, if any, (B) the
nominee holder for, and number of, shares owned beneficially
but not of record by such stockholder and by any such
Stockholder Associated Person, (C) whether and the extent to
which any hedging or other transaction or series of
transactions has been entered into by or on behalf of, or
any other agreement, arrangement or understanding (including
any short position or any borrowing or lending of shares)
has been made, the effect or intent of which is to mitigate
loss to or manage risk of share price changes for, or to
increase the voting power of, such stockholder or any such
Stockholder Associated Person with respect to any share of
stock of the Corporation (collectively, "Hedging
Activities") and (D) a general description of whether and
the extent to which such stockholder or such Stockholder
Associated Person has engaged in Hedging Activities with
respect to shares of stock of any other closed-end
investment company; (iv) as to the stockholder giving the
notice and any Stockholder Associated Person covered by
clauses (ii) or (iii) of this paragraph (2) of this Section
2.9(a), the name and address of such stockholder, as they
appear on the Corporation's stock ledger and current name
and address, if different, and of such Stockholder
Associated Person; and (v) to the extent known by the
stockholder giving the notice, the name and address of any
other stockholder supporting the nominee for election or
reelection as a director or the proposal of other business
on the date of such stockholder's notice.
(3) Notwithstanding anything in this subsection
(a) of this Section 2.9 to the contrary, in the event that
the number of directors to be elected to the Board of
Directors is increased and there is no public announcement
of such action at least 130 days prior to the first
anniversary of the date of mailing of the notice of the
preceding year's annual meeting, a stockholder's notice
required by this Section 2.9(a) shall also be considered
timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered
to the Secretary at the principal executive office of the
Corporation not later than 5:00 p.m., Eastern Time, on the
tenth day following the day on which such public
announcement is first made by the Corporation.
(4) For purposes of this Section 2.9,
"Stockholder Associated Person" of any stockholder shall
mean (i) any person controlling, directly or indirectly, or
acting in concert with, such stockholder (including, without
limitation, any person who is a member of a "group" for
purposes of Section 13(d) of the Exchange Act, or any
successor provision, that includes such stockholder), (ii)
any beneficial owner of shares of stock of the Corporation
owned of record or beneficially by such stockholder and
(iii) any person controlling, controlled by or under common
control with such Stockholder Associated Person.
(b) Special Meetings of Stockholders. Only such
business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting
pursuant to the Corporation's notice of meeting.
Nominations of individuals for election to the Board of
Directors may be made at a special meeting of stockholders
at which directors are to be elected (i) pursuant to the
Corporation's notice of meeting, (ii) by or at the direction
of the Board of Directors or (iii) provided that the Board
of Directors has determined that directors shall be elected
at such special meeting, by any stockholder of the
Corporation who is a stockholder of record both at the time
of giving of notice provided for in this Section 2.9 and at
the time of the special meeting, who is entitled to vote at
the meeting and who complied with the notice procedures set
forth in this Section 2.9. In the event the Corporation
calls a special meeting of stockholders for the purpose of
electing one or more individuals to the Board of Directors,
any such stockholder may nominate an individual or
individuals (as the case may be) for election as a director
as specified in the Corporation's notice of meeting, if the
stockholder's notice required by paragraph (2) of this
Section 2.9(a) shall be delivered to the Secretary at the
principal executive office of the Corporation not earlier
than the 150th day prior to such special meeting and not
later than 5:00 p.m., Eastern Time, on the later of the
120th day prior to such special meeting or the tenth day
following the day on which public announcement is first made
of the date of the special meeting and of the nominees
proposed by the Board of Directors to be elected at such
meeting. The public announcement of a postponement or
adjournment of a special meeting shall not commence a new
time period for the giving of a stockholder's notice as
described above.
(c) General.
(1) Upon written request by the Secretary or the
Board of Directors or any committee thereof, any stockholder
proposing a nominee for election as a director or any
proposal for other business at a meeting of stockholders
shall provide, within five Business Days of delivery of such
request (or such other period as may be specified in such
request), written verification, satisfactory, in the
discretion of the Board of Directors or any committee
thereof or any authorized officer of the Corporation, to
demonstrate the accuracy of any information submitted by the
stockholder pursuant to this Section 2.9. If a stockholder
fails to provide such written verification within such
period, the information as to which written verification was
requested may be deemed not to have been provided in
accordance with this Section 2.9.
(2) Only such individuals who are nominated in
accordance with this Section 2.9 shall be eligible for
election by stockholders as directors, and only such
business shall be conducted at a meeting of stockholders as
shall have been brought before the meeting in accordance
with this Section 2.9. The chairman of the meeting shall
have the power to determine whether a nomination or any
other business proposed to be brought before the meeting was
made or proposed, as the case may be, in accordance with
this Section 2.9.
(3) For purposes of this Section 2.9, (a) the
"Date of Mailing of the Notice" shall mean the date of the
proxy statement for the solicitation of proxies for election
of directors and (b) "public announcement" shall mean
disclosure (i) in a press release reported by the Dow Jones
News Service, Associated Press, Business Wire, PR Newswire
or comparable news service or (ii) in a document publicly
filed by the Corporation with the Securities and Exchange
Commission pursuant to the Exchange Act or the Investment
Company Act.
(4) Notwithstanding the foregoing provisions of
this Section 2.9, a stockholder shall also comply with all
applicable requirements of state law and of the Exchange Act
and the rules and regulations thereunder with respect to the
matters set forth in this Section 2.9. Nothing in this
Section 2.9 shall be deemed to affect any right of a
stockholder to request inclusion of a proposal in, nor the
right of the Corporation to omit a proposal from, the
Corporation's proxy statement pursuant to Rule 14a-8 (or any
successor provision) under the Exchange Act.
The Amended and Restated Advance Notice Bylaws apply to
Registrant's 2008 Annual Meeting, and the advance notice of
Director nominees and any other proposals that a stockholder
seeks to bring before the 2008 Annual Meeting but does not
seek to have included in the Company's proxy statement and
form of proxy for that meeting must be received at the
office of the Company no earlier than September 19, 2007,
and no later than October 19, 2007.
Item 11. Controls and Procedures.
Conclusions of principal officers concerning controls and
procedures.
(a) As of July 23, 2007, an evaluation was performed
under the supervision and with the participation of the
officers of registrant, including the principal executive
officer (PEO) and principal financial officer (PFO), of the
effectiveness of registrant's disclosure controls and
procedures. Based on that evaluation, the registrant's
officers, including the PEO and PFO, concluded that, as of
July 23, 2007, the registrant's disclosure controls and
procedures were reasonably designed so as to ensure that
material information relating to the registrant is made
known to the PEO and PFO.
(b) There have been no significant changes in the
registrant's internal control over financial reporting (as
defined in Rule 30a-3(d) under the Investment Company Act of
1940 (17 CFR 270.30a-3(d)) that occurred during the
registrant's last fiscal half-year that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 12. Exhibits attached hereto. (Attach certifications as
exhibits)
(1) Not applicable. See registrant's response to Item 2,
above.
(2) Separate certifications by the registrant's principal
executive officer and principal financial officer, pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 and
required by Rule 30a-2 under the Investment Company Act of
1940, are attached.
A certification by the registrant's principal executive
officer and principal financial officer, pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, is attached.
Pursuant to the requirements of the Securities Exchange Act
of 1934 and the Investment Company Act of 1940, the
registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THE ADAMS EXPRESS COMPANY
BY: /s/ Douglas G. Ober
-----------------------
Douglas G. Ober
Chief Executive Officer
(Principal Executive Officer)
Date: July 23, 2007
Pursuant to the requirements of the Securities Exchange Act
of 1934 and the Investment Company Act of 1940, this report
has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates
indicated.
BY: /s/ Douglas G. Ober
-----------------------
Douglas G. Ober
Chief Executive Officer
(Principal Executive Officer)
Date: July 23, 2007
BY: /s/ Maureen A. Jones
-----------------------
Maureen A. Jones
Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
Date: July 23, 2007