First Quarter Report
- --------------------------------------------------------------------------------
March 31, 1996
[ADAMS Express Company Logo appears here]
<PAGE>
Letter to Stockholders
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We are pleased to submit the financial statements of the Company for the three
months ended March 31, 1996, a schedule of investments and a list of
principal changes in portfolio securities for the first quarter.
Net assets of the Company at March 31, 1996 were
$22.15 per share as compared with $21.36 per share at December 31, 1995 on the
46,165,517 shares outstanding on each date. The total return on net assets (with
reinvestment of income and capital gains distributions) for the period was 4.4%.
On March 1, 1996, a distribution of $0.12 per share was paid consisting of $0.03
from 1995 short-term capital gain, $0.02 from 1995 investment income and $0.07
from 1996 investment income. All are taxable in 1996. A regular 1996 investment
income dividend of $0.12 per share has been declared to shareholders of record
May 20, 1996, payable June 1, 1996.
Net investment income for the three months ended March 31, 1996 amounted to
$5,403,958 compared with $5,056,386 for the same period in 1995. These earnings
are equal to $0.12 and $0.11 respectively, per share, on the average number of
shares outstanding during each period.
Net capital gain realized on investments for the three months ended March 31,
1996 amounted to $17,568,080 the equivalent of $0.38 per share.
The Annual Meeting, held on March 26, 1996 in Tampa, Florida, was well attended
by shareholders. Upon conclusion of the formal segment of the meeting,
management reviewed the portfolio's performance in 1995 and discussed the
outlook for the future. Stockholder questions were then entertained on subjects
ranging from specific stock holdings to the Company's expense ratio, among the
lowest in the industry. The results of the voting at the Annual Meeting are
shown on page 10.
The Company is an internally managed equity fund whose investment policy is
essentially based on the primary objectives of preservation of capital, the
attainment of reasonable income from investments and, in addition, an
opportunity for capital appreciation.
By order of the Board of Directors,
/s/ Douglas G. Ober /s/ Joseph M. Truta
Douglas G. Ober, Joseph M. Truta,
Chairman and Chief President
Executive Officer
April 19, 1996
<PAGE>
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
March 31, 1996 (unaudited)
<TABLE>
<S> <C> <C>
Assets
Investments* at value:
Non-controlled affiliate, Petroleum & Resources
Corporation (cost $22,153,015) $ 34,223,904
Common stocks and convertible securities
(cost $562,335,567) 878,194,539
Short-term investments (cost $113,328,968) 113,328,968 $1,025,747,411
- ---------------------------------------------------------------------------------------------------------------------------
Cash 170,854
Receivables:
Investment securities sold 2,013,283
Dividends and interest 2,280,413
Prepaid expenses and other assets 2,906,427
- ---------------------------------------------------------------------------------------------------------------------------
Total Assets 1,033,118,388
Liabilities
Investment securities purchased 7,657,208
Open option contracts at value (proceeds $1,301,294) 1,190,000
Accrued expenses 1,656,685
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Total Liabilities 10,503,893
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Net Assets $1,022,614,495
===========================================================================================================================
Net Assets
Common Stock at par value $1.00 per share, authorized 75,000,000
shares; issued and outstanding 46,165,517 shares $ 46,165,517
Additional capital surplus 627,210,838
Undistributed net investment income 3,096,028
Undistributed net realized gain on investments 18,100,957
Unrealized appreciation on investments 328,041,155
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Stock $1,022,614,495
===========================================================================================================================
Net Asset Value Per Share of Common Stock $22.15
===========================================================================================================================
</TABLE>
*See Schedule of Investments on pages 6 through 8.
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
Statement of Operations
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Three Months Ended March 31, 1996 (unaudited)
<TABLE>
<S> <C>
Investment Income
Income:
Dividends:
From unaffiliated issuers $ 4,078,760
From non-controlled affiliate 194,747
Interest 2,236,468
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Total income 6,509,975
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Expenses:
Investment research 459,868
Administration and operations 223,693
Directors' fees 37,150
Reports and stockholder communications 68,415
Transfer agent, registrar and custodian expenses 102,573
Auditing services 12,502
Legal services 35,200
Occupancy and other office expenses 65,922
Travel, telephone and postage 37,623
Other 63,071
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Total expenses 1,106,017
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Net Investment Income 5,403,958
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Realized Gain and Change in Unrealized Appreciation on Investments
Net realized gain on security transactions 17,533,713
Net realized gain distributed by regulated investment company (non-controlled affiliate) 34,367
Change in unrealized appreciation on investments 18,951,406
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Net Gain on Investments 36,519,486
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Change in Net Assets Resulting from Operations $41,923,444
===========================================================================================================================
</TABLE>
Statement of Changes in Net Assets
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<TABLE>
<CAPTION>
Three Months Year Ended
Ended March 31, 1996 Dec. 31, 1995
(unaudited)
<S> <C> <C>
From Operations:
Net investment income $ 5,403,958 $ 22,394,045
Net realized gain on investments 17,568,080 50,917,119
Change in unrealized appreciation on investments 18,951,406 155,573,255
- ---------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 41,923,444 228,884,419
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Dividends to Stockholders from:
Net investment income (4,154,897) (23,082,795)
Net realized gain from investment transactions (1,384,966) (50,604,589)
- ---------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions (5,539,863) (73,687,384)
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From Capital Share Transactions:
Value of common shares issued in payment of optional distributions -0- 32,736,279
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Total increase in net assets 36,383,581 187,933,314
Net Assets:
Beginning of period 986,230,914 798,297,600
- ---------------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $3,096,028 and $1,846,967, respectively) $1,022,614,495 $986,230,914
===========================================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Notes to Financial Statements (unaudited)
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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's
investment objectives as well as the nature and risk of its investment
transactions are set forth in the Company's registration statement.
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 are stated at
cost which, when combined with accrued interest receivable, approximates value.
Options are valued at the last sale price or 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 shareholders 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
shareholders 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 including options, at March 31, 1996 was $698,483,181, and net
unrealized appreciation aggregated $328,565,524, of which the related gross
unrealized appreciation and depreciation were $339,222,631 and $10,657,107,
respectively.
Distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. Accordingly, periodic
reclassifications are made within the Company's capital accounts to reflect
income and gains available for distribution under income tax regulations.
3. Investment Transactions
Purchases and sales of portfolio securities, other than options and short-term
investments, during the three months ended March 31, 1996 were $37,495,478 and
$33,934,473, respectively. Option transactions comprised an insignificant
portion of operations during the period ended March 31, 1996. All investment
decisions are made by a committee, and no one person is primarily responsible
for making recommendations to that committee.
4. Capital Stock
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. No purchases
were made during the three months ended March 31, 1996.
The Company has 10,000,000 unissued preferred shares without par value.
The Company has an employee incentive stock option and stock appreciation rights
plan which provides for the issuance of options and stock appreciation rights
for the purchase of up to 1,200,000 shares of the Company's common stock at 100%
of the fair market value at date of grant. There were 271,334 stock options and
stock appreciation rights that expired unissued. Options are exercisable
beginning not less than one year after the date of grant and extend over ten
years from the date of grant. Stock appreciation rights are exercisable
beginning not less than two years after the date of grant and extend over the
period during which the option is exercisable. The stock appreciation rights
allow the optionees to surrender their rights to exercise their options and
receive cash or shares in an amount equal to the difference between the option
price and the fair market value of the common stock at the date of surrender.
Under the plan, the exercise price of the options and related stock appreciation
rights is reduced by the per share amount of capital gain paid by the Company
during subsequent years. During the three months ended March 31, 1996, no
options or stock appreciation rights were granted; stock appreciation rights
relating to 35,500 stock option shares were exercised at market prices of
$18.625-$19.125 per share and the stock options relating to these rights which
had exercise prices of $13.170-$16.455 per share were cancelled. At March 31,
1996, there were outstanding exercisable options to purchase 162,500 common
shares at $8.740-$16.425 per share and unexercisable options to purchase 319,250
common shares at $14.4550- $18.4075 per share. At March 31, 1996, there were
943,376 shares available for future option grants.
5. Retirement Plans
The Company provides retirement benefits for its employees under a
non-contributory qualified defined benefit pension plan. The benefits are based
on years of service and compensation during the last 36 months of employment.
The Company's current funding policy is to contribute annually to the plan only
those amounts that can be deducted for federal income tax purposes.
The actuarially computed net pension cost credit for the three months ended
March 31, 1996 was $108,878 and consisted of service expense of $43,779,
interest expense of $75,137, expected return on plan assets of $176,346, and a
net amortization credit of $51,448.
In determining the actuarial present value of the projected benefit obligation,
the interest rate used for the weighted-average discount rate and the expected
rate of annual salary increases was 7.0% and the expected long-term rate of
return on plan assets was 8.0%.
On January 1, 1996, the accumulated benefit obligation, including vested
benefits, was $3,553,626. The fair value of the plan assets was $8,912,506 and
the projected benefit obligation for service rendered to date was $4,388,767.
This resulted in excess plan assets of $4,523,739 of which $747,869 is the
remaining portion of the unrecognized net asset existing at January 1, 1987
which is being amortized over 15 years. Prepaid pension cost included in other
assets at March 31, 1996 was $2,769,335.
4
<PAGE>
Notes to Financial Statements (continued)
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In addition, the Company has a nonqualified unfunded benefit plan which provides
employees with defined retirement benefits to supplement the qualified plan. The
Company does not provide postretirement medical benefits.
6. Expenses
Aggregate remuneration paid or accrued during the three months ended March 31,
1996 to officers and directors amounted to $616,977 of which $37,150 was paid as
fees to directors who were not officers.
Research, accounting and other office services provided to and reimbursed by the
Company's non-controlled affiliate, Petroleum & Resources Corporation, amounted
to $156,781 for the three months ended March 31, 1996.
7. 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 value of which exceeds the
market value of such loaned securities. At March 31, 1996, the value of security
loans outstanding was $25,006,250.
Financial Highlights
<TABLE>
<CAPTION>
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Three Months Ended
- ---------------------------------------------------------------------------------------------------------------------------
(unaudited)
March 31, March 31, Year Ended December 31
- ---------------------------------------------------------------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period $21.36 $17.98 $17.98 $19.78 $20.48 $20.21 $16.82
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income 0.12 0.11 0.50 0.51 0.48 0.46 0.53
Net realized gains and change in
unrealized appreciation and other
changes 0.79 1.10 4.54 (0.71) 1.18 1.43 4.49
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.91 1.21 5.04 (0.20) 1.66 1.89 5.02
Less distributions
Dividends from net investment
income (0.09) (0.09) (0.52) (0.50) (0.45) (0.46) (0.54)
Distributions from net realized gains (0.03) (0.03) (1.14) (1.10) (1.18) (1.16) (1.09)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (0.12) (0.12) (1.66) (1.60) (1.63) (1.62) (1.63)
Dilution resulting from the rights
offering -- -- -- -- (0.73) -- --
Net asset value, end of period $22.15 $19.07 $21.36 $17.98 $19.78 $20.48 $20.21
===========================================================================================================================
Per share market price, end of period $19.125 $16.25 $18.50 $15.625 $17.875 $20.00 $19.00
Total Investment Return
Based on market price 4.0% 4.8% 29.5% (3.7)% (2.7)% 14.1% 41.0%
Ratios/Supplemental Data
Net assets, end of period (in 000's)$1,022,614 $846,716 $986,231 $798,298 $840,610 $696,925 $661,896
Ratio of expenses to average
net assets 0.44%+ 0.46%+ 0.46% 0.33% 0.36% 0.49% 0.58%
Ratio of net investment income to
average net assets 2.14%+ 2.46%+ 2.51% 2.65% 2.33% 2.30% 2.74%
Portfolio turnover 15.23%+ 12.35%+ 23.98% 19.23% 21.40% 17.97% 17.64%
Average brokerage commission rate $0.07 -- -- -- -- -- --
Number of shares outstanding at
end of period (in 000's) 46,166 44,390 46,166 44,390 42,498 34,027 32,747
===========================================================================================================================
</TABLE>
+ Ratios presented on annualized basis.
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.
5
<PAGE>
Schedule of Investments
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March 31, 1996 (unaudited)
Prin. Amt.
or Shares Value(A)
Stocks And Convertible
Securities -- 89.2%
Basic Industries -- 7.4%
Paper and Forest
Products -- 3.0%
Consolidated Papers, Inc. 100,000 $ 5,625,000
International Paper Co. 140,000 5,530,000
Kimberly-Clark Corp. 150,000 11,156,250
Weyerhaeuser Co. 190,000 8,763,750
- --------------------------------------------------------------------------------
31,075,000
Other -- 4.4%
Air Products & Chemicals, Inc. 160,000 8,740,000
Cemex, S.A. de C.V. 4.25%
Conv. Sub. Debs. due
1997(B) $4,000,000 3,620,000
Cooper Industries, Inc.
7.05% Conv. Sub. Debs.
due 2015 $4,540,000 4,698,900
Deere & Co. 270,000 11,238,750
The BFGoodrich Co. 55,000 4,372,500
Granite Construction Inc. 225,000 6,637,500+
Inco Ltd. 7.75% Conv.
Debs. due 2016 $5,000,000 5,225,000
- --------------------------------------------------------------------------------
44,532,650
- --------------------------------------------------------------------------------
Consumer -- 15.0%
Consumer Services -- 3.9%
Brinker International, Inc. (C)280,000 4,690,000
Cracker Barrel Old Country
Store, Inc. 350,000 8,137,500+
McDonald's Corp. 315,000 15,120,000
Scandinavian Broadcasting
System SA 7.25% Conv.
Sub. Debs. due 2005 $3,000,000 3,069,000+
Time Warner Inc. 150,000 6,131,250
USWEST Media Group, Inc. (C) 150,000 3,093,750
- --------------------------------------------------------------------------------
40,241,500
- --------------------------------------------------------------------------------
Consumer Staples -- 8.3%
American Greetings Corp. 200,000 5,525,000+
CPC International Inc. 127,500 8,845,313
Campbell Soup Co. 190,000 11,566,250
Coca-Cola Co. 90,000 7,447,500
Crown Cork &
Seal Co., Inc. 145,000 7,068,750
Duracell International Inc. 68,100 3,379,463
Houghton Mifflin Co. 217,900 9,614,838
International Flavors &
Fragrances, Inc. 190,000 9,096,250
Prin. Amt.
or Shares Value(A)
Nabisco Holdings Corp. 50,000 $ 1,637,500
PepsiCo, Inc. 160,000 10,120,000
Procter & Gamble Co. 125,000 10,593,750
- --------------------------------------------------------------------------------
84,894,614
- --------------------------------------------------------------------------------
Distribution -- 2.8%
Borders Group, Inc. (C) 225,000 6,412,500
Dillard Department Stores,
Inc. 200,000 6,925,000
Home Depot, Inc. 293,870 14,032,293
Toy Biz, Inc. (C) 54,000 965,250
- --------------------------------------------------------------------------------
28,335,043
- --------------------------------------------------------------------------------
Health Care -- 10.0%
Abbott Laboratories 200,000 8,150,000
Allergan, Inc. 161,300 5,947,938
Beckman Instruments, Inc. 175,000 6,825,000
Caremark International Inc. 300,000 7,537,500
Chiron Corp. (C) 77,049 7,570,064+
Elan Corp., plc ADR (C) 230,000 14,777,500
Horizon/CMS Healthcare
Corp. (C) 215,880 3,076,290
Integrated Health Services,
Inc. 5.75% Conv. Sub.
Debs. due 2001 $6,675,000 6,074,250
Integrated Health Services,
Inc. 6% Conv. Sub. Debs.
due 2003 $500,000 472,500
Life Technologies, Inc. 205,000 5,740,000+
Lilly (Eli) & Co. 116,000 7,540,000
Merck & Co., Inc. 200,000 12,450,000
ONCOR, Inc. (C) 800,000 4,300,000
OPTION Care, Inc. (C) 250,000 1,093,750+
SmithKline Beecham plc ADR 200,000 10,300,000
- --------------------------------------------------------------------------------
101,854,792
- --------------------------------------------------------------------------------
Energy -- 9.3%
Oil and Natural Gas -- 9.3%
British Petroleum plc ADR 110,577 11,748,806
Consolidated Natural Gas Co. 115,800 5,037,300
Enron Corp. 6.25%
Exch. Notes due 1998 110,000 2,791,250
MCN Corp. 400,000 9,250,000
Mobil Corp. 60,000 6,952,500
Petroleum & Resources
Corporation (D) 1,145,570 34,223,904
Royal Dutch Petroleum Co. 55,000 7,768,750
Schlumberger Ltd. 54,200 4,288,575
Texaco Inc. 89,000 7,631,750
Unocal Corp. $3.50 Conv.
Pfd. (B) 100,000 5,525,000
- --------------------------------------------------------------------------------
95,217,835
- --------------------------------------------------------------------------------
6
<PAGE>
Prin. Amt.
or Shares Value(A)
Financial -- 111.8%
Banking -- 6.2%
Bank of New Hampshire Corp. 118,500 $ 5,095,500+
Federal Home Loan Mortgage
Corp. 90,000 7,672,500
First Interstate Bancorp 30,000 5,205,000
Great Western Financial Corp. 425,000 10,253,125
Integra Financial Corp. 40,000 2,805,000
Mellon Bank Corp. 165,000 9,116,250
Norwest Corp. 100,500 3,693,375
Provident Bankshares Corp. 125,000 4,156,250+
Wachovia Corp. 210,000 9,397,500
Wilmington Trust Corp. 185,000 5,966,250+
- --------------------------------------------------------------------------------
63,360,750
- --------------------------------------------------------------------------------
Insurance -- 5.6%
AMBAC Inc. 200,000 9,625,000
American International Group,
Inc. 180,000 16,852,500
Financial Security Assurance
Holdings Ltd. 235,060 6,023,413
Lincoln National Corp. 140,000 7,105,000
PartnerRe Ltd. 245,000 7,258,125+
Reinsurance Group of
America, Inc. 199,900 7,321,338
Security-Connecticut Corp. 130,000 3,396,250
- --------------------------------------------------------------------------------
57,581,626
- --------------------------------------------------------------------------------
Producer Goods -- 16.8%
Technology -- 10.3%
AMP Inc. 100,000 4,137,500
American Express Co. 6.25%
DECS due 1996 210,000 12,390,000
Computer Sciences Corp.(C) 136,000 9,571,000
DST Systems Inc. (C) 175,000 5,359,375
General Motors Corp. Ser. E 168,936 9,629,352
Keane, Inc. (C) 425,000 12,696,875
Motorola, Inc. LYONs due
2009 $650,000 611,000
Motorola, Inc. 160,000 8,480,000
Pall Corp. 265,000 6,790,625
QuickResponse Services,
Inc. (C) 218,000 5,613,500+
Sterling Software, Inc. (C) 245,000 17,272,500
Verifone, Inc. (C) 302,500 12,705,000
- --------------------------------------------------------------------------------
105,256,727
- --------------------------------------------------------------------------------
Other -- 6.5%
Boeing Co. 89,100 7,718,288
Emerson Electric Co. 36,500 2,947,375
General Electric Co. 350,000 27,256,250
Masco Corp. 200,000 5,800,000
Minnesota Mining &
Manufacturing Co. 125,000 8,078,125
Rockwell International Corp. 250,000 14,718,750
- --------------------------------------------------------------------------------
66,518,788
- --------------------------------------------------------------------------------
<PAGE>
Prin. Amt.
or Shares Value(A)
================================================================================
Transportation -- 3.5%
Railroads -- 1.4%
Illinois Central Corp. 210,000 $ 5,985,000
Union Pacific Corp. 130,000 8,921,250
- --------------------------------------------------------------------------------
14,906,250
- --------------------------------------------------------------------------------
Other -- 2.1%
AMR Corp. 6.125% Conv. Sub.
Debs. due 2024 $4,500,000 5,152,500
Delta Air Lines, Inc. $3.50
Ser. C Conv. Pfd. 100,000 6,112,500
Ryder System, Inc. 365,000 9,946,250
- --------------------------------------------------------------------------------
21,211,250
- --------------------------------------------------------------------------------
Utilities -- 15.2%
Electric And Gas Utilities -- 5.8%
Black Hills Corp. 249,700 6,055,225
CINergy Corp. 300,000 9,000,000
DPL Inc. 400,000 9,550,000
Empresa Nacional de
Electricidad, S.A. ADR 150,000 8,550,000
LG&E Energy Corp. 125,000 5,359,375
PowerGen plc ADS (partially
paid) 138,000 3,312,000
TECO Energy, Inc. 300,000 7,462,500
Washington Gas Light Co. 300,000 6,562,500
Wisconsin Energy Corp. 129,000 3,660,375
- --------------------------------------------------------------------------------
59,511,975
- --------------------------------------------------------------------------------
Telecommunications -- 9.4%
AT&T Co. 200,000 12,225,000
AirTouch Communications (C) 200,000 6,225,000
Ameritech Corp. 140,000 7,630,000
Bell Atlantic Corp. 100,000 6,187,500
BellSouth Corp. 200,000 7,400,000
Ericsson (L.M.) Telephone Co.
4.25% Conv. Sub. Debs.
due 2000 $120,000 356,280+
Ericsson (L.M.) Telephone Co.
ADR 440,000 9,405,000+
First Chicago Corp. 5.50%
DECS due 1997 120,000 2,490,000
GTE Corp. 250,000 10,937,500
Nokia Corp. Pfd. ADR 140,000 4,795,000
Northern Telecom Ltd. 250,000 11,937,500
SBC Communications Inc. 190,000 9,998,750
Tele Danmark A/S ADS 260,000 6,727,500
- --------------------------------------------------------------------------------
96,315,030
- --------------------------------------------------------------------------------
Other -- 0.2%
Stocks under accumulation 1,604,613
- --------------------------------------------------------------------------------
Total Stocks and Convertible
Securities
(Cost $584,488,582)(E) 912,418,443
- --------------------------------------------------------------------------------
7
<PAGE>
Prin. Amt. Value(A)
Short-Term Investments -- 11.1%
Certificates of Deposit -- 4.4%
First Alabama Bank, Birmingham,
5.30%, due 4/11/96 $ 5,000,000 $ 5,000,000
Mercantile-Safe Deposit &
Trust Co., 5.40-5.45%,
due 4/4/96-4/11/96 10,000,000 10,000,000
NBDBank N.A., Detroit,
5.19%, due 4/25/96 10,000,000 10,000,000
Old Kent Bank &Trust Co.,
5.15%, due 4/11/96 5,000,000 5,000,000
U.S. Bank of Washington, NA.,
5.23%, due 4/18/96 5,000,000 5,000,000
Wachovia Bank of Georgia N.A.,
5.18%, due 4/11/96 10,000,000 10,000,000
- --------------------------------------------------------------------------------
45,000,000
- --------------------------------------------------------------------------------
Commercial Paper -- 6.7%
AT&T Capital Corp.,
5.18%, due 4/11/96 10,000,000 9,939,567
Chevron Oil Finance Co.,
5.15%, due 4/25/96 3,520,000 3,501,368
Chevron UK Investment PLC,
5.37%, due 5/2/96 3,799,000 3,779,733
Prin. Amt. Value(A)
Coca-Cola Co., 5.15-5.22%,
due 4/3/96-4/30/96 $ 9,959,000 $ 9,902,540
Ford Motor Credit Corp.,
5.34%, due 4/18/96 10,000,000 9,958,467
General Electric Capital Corp.,
5.33%, due 5/2/96 10,000,000 9,948,180
Penney (J.C.) Funding Corp.,
5.18%, due 4/4/96 10,000,000 9,947,275
PepsiCo, Inc.,
5.25%, due 5/2/96 6,384,000 6,351,415
USAA Capital Corp.,
5.26%, due 4/30/96 5,035,000 5,000,423
- --------------------------------------------------------------------------------
68,328,968
- --------------------------------------------------------------------------------
Total Short-Term Investments
(Cost $113,328,968) 113,328,968
- --------------------------------------------------------------------------------
Total Investments
(Cost $697,817,550) 1,025,747,411
Cash, receivables and other
assets, less liabilities (3,132,916)
- --------------------------------------------------------------------------------
Net Assets-- 100.0% $1,022,614,495
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Notes:
(A) See note 1 to financial statements. Securities are listed on the New York
Stock Exchange, the American Stock Exchange or the Toronto Stock Exchange
except restricted securities and also those marked (+), which are traded
"Over-the-Counter."
(B) Restricted securities (Cemex, S.A. de C.V. 4.25% Conv. Sub. Debs. due 1997,
acquired 9/28/94, cost $4,053,999, Unocal Corp. $3.50 Conv. Pfd. acquired
7/21/92, cost $5,000,000).
(C) Presently non-dividend paying.
(D) Non-controlled affiliate.
(E) The aggregate market value of stocks held in escrow at March 31, 1996
covering open call contracts written was $16,383,750. In addition, the
required aggregate market value of securities segregated by the custodian
to collateralize open put option contracts written was $29,025,000.
Historical Financial Statistics
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Dividends Distributions
Asset from from
Common Value Net Investment Net Realized
Value of Shares per Income Gains
Dec. 31 Net Assets Outstanding Share per Share per Share
===========================================================================================================================
<C> <C> <C> <C> <C> <C>
1986........................... $ 468,344,507 24,004,882 $19.51 $.71 $3.74
1987........................... 427,225,965 26,833,998 15.92 .78 2.66
1988........................... 455,825,580 28,295,508 16.11 .50 1.32
1989........................... 550,091,129 29,982,939 18.35 .70 1.36
1990........................... 529,482,769 31,479,340 16.82 .66 1.06
1991........................... 661,895,779 32,747,497 20.21 .54 1.09
1992........................... 696,924,779 34,026,625 20.48 .46 1.16
1993........................... 840,610,252 42,497,665 19.78 .45 1.18
1994........................... 798,297,600 44,389,990 17.98 .50 1.10
1995........................... 986,230,914 46,165,517 21.36 .52 1.14
March 31, 1996 (unaudited)..... 1,022,614,495 46,165,517 22.15 .21* .03
- --------------------------------------------------------------------------------
</TABLE>
*Paid or declared.
8
<PAGE>
Principal Changes in Portfolio Securities
- --------------------------------------------------------------------------------
During the Three Months Ended March 31, 1996 (unaudited)
<TABLE>
<CAPTION>
Shares or Principal Amount
- ---------------------------------------------------------------------------------------------------------------------------
Held
Additions Reductions March 31, 1996
<S> <C> <C> <C>
AMR Corp. 6.125% Conv. Sub. Debs. due 2004 $4,500,000 $4,500,000
Crown Cork & Seal Co., Inc. 145,000 145,000
DPL Inc. 31,500 400,000
Delta Air Lines, Inc. $3.50 Ser. C Conv. Pfd. 100,000 100,000
Duracell International Inc. 68,100 68,100
Enron Corp., 6.25% Exch. Notes due 1998 110,000 110,000
General Motors Corp. Ser. E 168,936(1) 168,936
Illinois Central Corp. 70,000(2) 210,000
Keane, Inc. 52,600 425,000
Kimberly-Clark Corp. 15,000 10,000 150,000
McDonald's Corp. 40,000 15,000 315,000
Ryder System, Inc. 65,000 365,000
Digital Equipment Corp. 45,000 --
First Interstate Bancorp 50,000 30,000
General Motors Corp. $3.25 Conv. Pfd. C 120,000(1) --
Sunrise Medical Inc. 270,000 --
Wal-Mart Stores, Inc. 450,000 --
</TABLE>
- --------------------------------------------------------------------------------
(1) Received 1.4078 shares for each share of General Motors Corp. $3.25 Conv.
Pfd. C.
(2) By stock split.
- --------------------------------------------------------------------------------
Common Stock
Listed on the New York Stock Exchange
and the Pacific Stock Exchange
Transfer Agent, Registrar & Custodian of Securities
The Bank of New York
101 Barclay Street, 11E
New York, NY 10007
The Bank's Shareholder Relations Department: (800) 432-8224
The Company Office Address: Seven St. Paul Street,
Suite 1140, Baltimore, MD 21202
The Company Office Telephone: (410) 752-5900 or (800) 638-2479
Counsel: Chadbourne & Parke L.L.P.
Independent Accountants: Coopers & Lybrand L.L.P.
9
<PAGE>
Annual Meeting of Stockholders
- --------------------------------------------------------------------------------
The Annual Meeting of Stockholders was held on March 26, 1996. For those
nominated, the following votes were cast for directors::
<TABLE>
<CAPTION>
votes for votes withheld
<S> <C> <C>
(A) Enrique R. Arzac: 38,021,833 672,432
(B) Leigh Carter: 37,942,042 752,223
(C) Allan Comrie: 37,828,082 866,183
(D) Daniel E. Emerson: 37,971,816 722,449
(E) Thomas H. Lenagh: 37,721,611 972,654
(F) W. David MacCallan: 38,027,001 667,264
(G) Augustine R. Marusi: 37,750,279 943,986
(H) W. Perry Neff: 37,965,077 729,188
(I) Douglas G. Ober: 38,053,226 641,039
(J) Landon Peters: 38,001,773 692,492
(K) John J. Roberts: 37,866,969 827,296
(L) Robert J.M. Wilson: 37,875,969 818,296
</TABLE>
A proposal to approve and ratify the selection of Coopers & Lybrand L.L.P. as
the firm of independent accountants of the Company for 1996 was approved with
37,908,102 votes for, 301,228 votes against and 484,935 votes abstaining.
A proposal to approve an amendment to Article SIXTH of the Articles of
Incorporation to increase the number of authorized shares of Common Stock of the
Company from 50,000,000 shares to 75,000,000 shares was approved with 33,643,389
votes for, 3,937,721 votes against and 1,113,154 votes abstaining.
10
<PAGE>
Dividend Payment Schedule and the
Automatic Dividend Reinvestment Plan
- --------------------------------------------------------------------------------
The Company presently pays dividends four times a year, as follows: (a) Three
interim investment income dividends on or about March, June and September 1st.
(b) A "year-end" payment consisting of the estimated balance of the net
investment income for the year and the net realized capital gain earned through
October 31st, payable in late December. Stockholders may elect to receive this
payment in stock or cash. In connection with this payment, all stockholders of
record are sent a dividend announcement notice and an election card in
mid-November. The following options are available:
(1) Full shares of stock for the combined income dividend and capital gain
distribution to the extent possible.
(2) Full shares of stock for the capital gain distribution to the extent
possible. Fractional shares and the income dividend are paid in cash. Without a
timely response, stockholders will be paid in accordance with this option.
(3) Both the income dividend and capital gain distribution in cash.
Stockholders holding shares in "street" or brokerage accounts may make one of
the above elections by notifying their brokerage house representative.
Stockholders of record of Adams stock have two additional ways to increase their
investment in the Company.
The Bank of New York's Automatic Dividend Reinvestment Plan provides that its
participants' four distributions are automatically invested in additional shares
of Adams common stock. New shares acquired are held on a book basis by the Bank.
Additionally, after the participants' first dividend is reinvested, they are
eligible to make cash payments in any amount from $25.00.
The Bank provides participants with reinvestment confirmations after each
dividend or cash payment. The Bank's fee for this service is 10% of the amount
received up to a maximum of $2.50 for the interim dividend payments and cash
payments. There is no charge for the "year-end" distribution.
The Bank's plan also provides for the deposit of certificate shares into the
participant's "book share" account for a one-time charge of $5.00.
A brochure and enrollment card may be obtained by calling the Bank at (800)
432-8224 or by writing to:
The Bank of New York
Dividend Reinvestment
P.O. Box 11258
Church Street Station
New York, NY 10277
11
<PAGE>
The Adams Express Company
- --------------------------------------------------------------------------------
Board of Directors
Enrique R. Arzac (3,4) Augustine R. Marusi (1,3)
Leigh Carter (1,3) W. Perry Neff (1,4)
Allan Comrie (2,4) Douglas G. Ober (1)
Daniel E. Emerson (1,3) Landon Peters (1,3)
Thomas H. Lenagh (2,4) John J. Roberts
W.D. MacCallan (2,4) Robert J.M. Wilson (1,2)
1. Member of Executive Committee
2. Member of Audit Committee
3. Member of Compensation Committee
4. Member of Retirement Committee
Officers
Douglas G. Ober Chairman and
Chief Executive Officer
Joseph M. Truta President
Richard F. Koloski Executive Vice President
Joan E. Sinclair Vice President--Research
Richard B. Tumolo Vice President--Research
Simeon F. Wooten, III Vice President--Research
J. G. Whitney Vice President and Secretary
Maureen A. Jones Treasurer
R. M. Carlsson Assistant Treasurer
Geraldine H. Stegner Assistant Secretary
- --------------------------------------------------------------------------------
Stock Data
- --------------------------------------------------------------------------------
Price (3/31/96) $19.125
Net Asset Value (3/31/96) $22.15
Discount: 13.7%
New York Stock Exchange and Pacific Stock Exchange ticker symbol: ADX
Newspaper stock listings are generally under the abbreviation: AdaEx
- --------------------------------------------------------------------------------
Distributions in 1996
- --------------------------------------------------------------------------------
From Investment Income $0.21
(paid or declared)
From Net Realized Gains 0.03
Total $0.24
- --------------------------------------------------------------------------------
1996 Dividend Payment Dates
- --------------------------------------------------------------------------------
March 1, 1996
June 1, 1996
September 1, 1996*
December 27, 1996*
*Anticipated
[recycled logo appears here) Printed on recycled paper
<PAGE>
