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: 811-02736
---------------------------------------------
PETROLEUM & RESOURCES CORPORATION
--------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
7 Saint Paul Street, Suite 1140, Baltimore, Maryland 21202
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Lawrence L. Hooper, Jr.
Petroleum & Resources Corporation
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, 2006
Date of reporting period: June 30, 2006
Item 1: Reports to Stockholders.
PETROLEUM & RESOURCES CORPORATION
--------------------------------------------------------------------------------
Board of Directors
Enrique R. Arzac 1,3 Thomas H. Lenagh 1,4
Phyllis O. Bonanno 1,4 Kathleen T. McGahran 2,4
Daniel E. Emerson 2,3 Douglas G. Ober 1
Frederic A. Escherich 2,3 John J. Roberts 1,3
Roger W. Gale 1,3 Craig R. Smith 2,4
1. Member of Executive Committee
2. Member of Audit Committee
3. Member of Compensation Committee
4. Member of Retirement Benefits Committee
Officers
Douglas G. Ober Chairman, President and Chief Executive Officer
Joseph M. Truta Executive Vice President
Lawrence L. Hooper, Jr. Vice President, General Counsel and Secretary
Maureen A. Jones Vice President, Chief Financial Officer and Treasurer
Nancy J.F. Prue Vice President
Robert E. Sullivan Vice President -- Research
Christine M. Sloan Assistant Treasurer
Geraldine H. Pare Assistant Secretary
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Stock Data
--------------------------------------------------------------------------------
Market Price (6/30/06) $ 33.99
Net Asset Value (6/30/06) $ 38.92
Discount: 12.7%
New York Stock Exchange and Pacific Exchange ticker symbol: PEO
NASDAQ Mutual Fund Quotation Symbol: XPEOX
Newspaper stock listings are generally under the abbreviation: PetRs
--------------------------------------------------------------------------------
Distributions in 2006
--------------------------------------------------------------------------------
From Investment Income (paid or declared) $ 0.29
From Net Realized Gains 0.10
---------
Total $ 0.39
=========
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2006 Dividend Payment Dates
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March 1, 2006
June 1, 2006
September 1, 2006
December 27, 2006*
*Anticipated
[GRAPHIC APPEARS HERE]
Petroleum & Resources Corporation
Semi-Annual Report
June 30,2006
investing in resources for the future (R)
LETTER TO STOCKHOLDERS
--------------------------------------------------------------------------------
We submit herewith the financial statements of the Corporation for the six
months ended June 30, 2006. In addition, there is the report of the independent
registered public accounting firm, a schedule of investments, and other
financial information.
Net assets of the Corporation at June 30, 2006 were $38.92 per share on
21,183,656 shares outstanding, compared with $35.24 per share at December 31,
2005 on 21,621,072 shares outstanding. On March 1, 2006, a distribution of $0.13
per share was paid, consisting of $0.07 from 2005 long-term capital gain, $0.03
from 2005 short-term capital gain and $0.03 from 2005 investment income, all
taxable in 2006. A 2006 investment income dividend of $0.13 per share was paid
on June 1, 2006, and another $0.13 per share investment income dividend has been
declared to shareholders of record August 15, 2006, payable on September 1,
2006.
Net investment income for the six months ended June 30, 2006 amounted to
$5,219,727, compared with $4,338,847 for the same period in 2005. These earnings
are equal to $0.25 and $0.20 per share.
Net capital gain realized on investments for the six months ended June 30, 2006
amounted to $39,877,100, the equivalent of $1.88 per share.
Current and potential shareholders can find information about the Corporation,
including the daily net asset value (NAV) per share, the market price, and the
discount/premium to the NAV, at its website (www.peteres.com). Also available at
the website are a brief history of the Corporation, historical financial
information, and other useful content. Further information regarding shareholder
services is located on page 15 of this report.
The Corporation is an internally-managed equity fund emphasizing petroleum and
other natural resource investments. The investment policy of the Corporation is
based on the primary objectives of preservation of capital, the attainment of
reasonable income from investments, and an opportunity for capital appreciation.
By order of the Board of Directors,
[GRAPHIC APPEARS HERE]
Douglas G. Ober,
Chairman, President and Chief Executive Officer
July 14, 2006
STATEMENT OF ASSETS AND LIABILITIES
-------------------------------------------------------------------------------------------------------------------------
June 30, 2006
Assets
Investments* at value:
Common stocks and convertible securities
(cost $328,230,601) $ 795,136,367
Short-term investments (cost $25,289,631) 25,289,631
Securities lending collateral (cost $41,638,110) 41,638,110 $ 862,064,108
--------------------------------------------------------------------------------------------------------
Cash 279,395
Receivables:
Investment securities sold 6,023,413
Dividends and interest 747,705
Prepaid pension cost 819,064
Prepaid expenses and other assets 478,559
-------------------------------------------------------------------------------------------------------------------------
Total Assets 870,412,244
-------------------------------------------------------------------------------------------------------------------------
Liabilities
Investment securities purchased 1,674,487
Open written option contracts at value (proceeds $484,412) 522,970
Obligations to return securities lending collateral 41,638,110
Accrued expenses 2,098,093
-------------------------------------------------------------------------------------------------------------------------
Total Liabilities 45,933,660
-------------------------------------------------------------------------------------------------------------------------
Net Assets $ 824,478,584
=========================================================================================================================
Net Assets
Common Stock at par value $1.00 per share, authorized 50,000,000 shares; issued
and outstanding 21,183,656 shares (includes 16,109 restricted shares,
restricted stock units for 4,800 shares, and deferred stock units for 584
shares)
(Note 6) $ 21,183,656
Additional capital surplus 295,301,156
Unearned compensation-- restricted stock awards (Note 6) (577,674)
Undistributed net investment income 1,910,775
Undistributed net realized gain on investments 39,793,463
Unrealized appreciation on investments 466,867,208
-------------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Stock $ 824,478,584
=========================================================================================================================
Net Asset Value Per Share of Common Stock $38.92
=========================================================================================================================
* 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, 2006
Investment Income
Income:
Dividends $ 6,872,709
Interest and other income 496,699
--------------------------------------------------------------------------------------------------------------------------
Total income 7,369,408
--------------------------------------------------------------------------------------------------------------------------
Expenses:
Investment research 880,094
Administration and operations 551,843
Directors' fees 200,116
Reports and stockholder communications 126,863
Transfer agent, registrar and custodian expenses 79,541
Auditing and accounting services 45,758
Legal services 31,472
Occupancy and other office expenses 147,378
Travel, telephone and postage 40,705
Other 45,911
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Total expenses 2,149,681
--------------------------------------------------------------------------------------------------------------------------
Net Investment Income 5,219,727
--------------------------------------------------------------------------------------------------------------------------
Realized Gain and Change in Unrealized Appreciation on Investments
Net realized gain on security transactions 39,877,100
Change in unrealized appreciation on investments 38,055,863
--------------------------------------------------------------------------------------------------------------------------
Net Gain on Investments 77,932,963
--------------------------------------------------------------------------------------------------------------------------
Change in Net Assets Resulting from Operations $ 83,152,690
==========================================================================================================================
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, 2006 December 31, 2005
---------------- -----------------
From Operations:
Net investment income $ 5,219,727 $ 11,391,783
Net realized gain on investments 39,877,100 26,239,852
Change in unrealized appreciation on investments 38,055,863 153,388,454
---------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 83,152,690 191,020,089
---------------------------------------------------------------------------------------------------------------------------
Distributions to Stockholders from:
Net investment income (3,415,584) (12,030,248)
Net realized gain from investment transactions (2,158,550) (25,924,473)
---------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions (5,574,134) (37,954,721)
---------------------------------------------------------------------------------------------------------------------------
From Capital Share Transactions:
Value of shares issued in payment of distributions 5,722 14,748,314
Cost of shares purchased (Note 4) (15,183,841) (24,891,727)
Deferred compensation (Notes 4,6) 164,495 104,296
---------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital share transactions (15,013,624) (10,039,117)
---------------------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets 62,564,932 143,026,251
Net Assets:
Beginning of period 761,913,652 618,887,401
---------------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $1,910,775 and $106,632, respectively) $ 824,478,584 $ 761,913,652
=============================================================================================================================
The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
This report, including the financial statements herein, is transmitted to the
stockholders of Petroleum & Resources Corporation for their information. It is
not a prospectus, circular or representation intended for use in the purchase or
sale of shares of the Corporation 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.
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4
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Petroleum & Resources Corporation (the Corporation) is registered under the
Investment Company Act of 1940 as a non-diversified investment company. The
Corporation's investment objectives as well as the nature and risk of its
investment transactions are set forth in the Corporation's registration
statement.
Security Valuation--Investments in securities traded on national security
exchanges 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.
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 Corporation'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 at June 30, 2006 was $395,128,519 and net unrealized appreciation
aggregated $466,935,589, of which the related gross unrealized appreciation and
depreciation were $469,716,003 and $2,780,414, 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 Corporation's capital accounts to reflect
income and gains available for distribution under income tax regulations.
3. INVESTMENT TRANSACTIONS
The Corporation'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, 2006 were $48,677,573 and
$74,249,686, respectively. Options may be written (sold) or purchased by the
Corporation. The Corporation, 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, 2006
can be found on page 12.
Transactions in written covered call and collateralized put options during the
six months ended June 30, 2006 were as follows:
Covered Calls Collateralized Puts
--------------------- -------------------
Contracts Premiums Contract Premiums
--------- --------- -------- --------
Options outstanding,
December 31, 2005 1,940 $292,777 1,050 $129,891
Options written 4,449 478,630 4,370 512,860
Options terminated in
closing purchase
transactions (250) (61,248) (805) (96,035)
Options expired (3,152) (353,637) (2,035) (229,447)
Options exercised (1,098) (160,730) (200) (28,649)
---------------------------------------------------------------------
Options outstanding,
June 30, 2006 1,889 $195,792 2,380 $288,620
---------------------------------------------------------------------
4. CAPITAL STOCK
The Corporation has 5,000,000 authorized and unissued preferred shares without
par value.
On December 27, 2005, the Corporation issued 438,416 shares of its Common Stock
at a price of $33.64 per share (the average market price on December 12, 2005)
to stockholders of record on November 22, 2005 who elected to take stock in
payment of the year-end distribution from 2005 capital gain and investment
income.
During 2006, the Corporation issued 164 shares of its Common Stock at a weighted
average price of $33.67 per share as dividend equivalents to holders of deferred
stock units and restricted stock units under the 2005 Equity Incentive
Compensation Plan.
The Corporation may purchase shares of its Common Stock from time to time at
such prices and amounts as the Board of Directors may deem advisable.
5
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
Transactions in Common Stock for 2006 and 2005 were as follows:
Shares Amount
----------------------- --------------------------
Six months Six months
ended Year ended ended Year ended
June 30, December 31, June 30, December 31,
2006 2005 2006 2005
--------- ------------ ---------- ------------
Shares issued in
payment of
dividends 164 438,416 $ 5,722 $ 14,748,314
Shares purchased
(at a
weighted
average discount
from net
asset value
of 9.4% and
8.1%,
respectively) (454,700) (806,050) (15,183,841) (24,891,727)
Net share
activity
under the
2005 Equity
Incentive
Compensation
Plan 17,119 9,030 164,495 104,296
-----------------------------------------------------------------------
Net change (437,417) (358,604) $(15,013,624) $(10,039,117)
=======================================================================
5. RETIREMENT PLANS
The Corporation's qualified defined benefit pension plan covers all employees
with at least one year of service. In addition, the Corporation has a
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
Corporation'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
Corporation deems appropriate in order to provide assets sufficient to meet
benefits to be paid to plan participants. During the six months ended June 30,
2006, the Corporation contributed $15,604 to the plans and will contribute an
additional $15,604 to the plans during the remainder of 2006. Any further
contribution cannot be determined with certainty until certain pension reform
legislation, pending in Congress, is passed. Such a contribution, if any, will
not exceed $625,000.
The following table aggregates the components of the plans' net periodic pension
cost for the six months ended June 30, 2006.
Service Cost $ 167,438
Interest Cost 163,996
Expected return on plan assets (156,096)
Amortization of prior service cost 18,859
Amortization of net loss 112,681
--------------------------------------------------------
Net periodic pension cost $ 306,878
========================================================
The Corporation also sponsors a defined contribution plan that covers
substantially all employees. For the six months ended June 30, 2006, the
Corporation expensed contributions of $50,994. The Corporation does not provide
postretirement medical benefits.
6. STOCK-BASED COMPENSATION
The Stock Option Plan adopted in 1985 ("1985 Plan") permits the issuance of
stock options and stock appreciation rights for the purchase of up to 895,522
shares of the Corporations's Common Stock at the fair market value on the date
of grant. The exercise price of the options and related stock appreciation
rights is reduced by the per share amount of capital gains paid by the
Corporation during subsequent years. Options are exercisable beginning not less
than one year after the date of grant and stock appreciation rights are
exercisable beginning not less than two years after the date of grant. The stock
appreciation rights allow the holders to surrender their rights to exercise
their options and receive cash or shares in an amount equal to the difference
between the option exercise price and the fair market value of the Common Stock
at the date of surrender. All options terminate 10 years from the date of grant
if not exercised. With the adoption of the 2005 Equity Incentive Compensation
Plan at the 2005 Annual Meeting, no further grants will be made under the 1985
Plan, although unexercised awards granted in 2004 and prior years remain
outstanding.
A summary of option activity under the 1985 Plan as of June 30, 2006, and
changes during the period then ended is presented below:
Weighted- Weighted-
Average Average
Exercise Remaining
Options Price Life (Years)
-------- --------- ------------
Outstanding at December
31, 2005 103,997 $ 18.24 5.07
Exercised (5,186) 14.90
Cancelled (4,474) 20.34
--------------------------------------------------------------
Outstanding at June 30,
2006 94,337 $ 18.22 4.57
--------------------------------------------------------------
Exercisable at June 30,
2006 44,300 $ 17.69 3.92
==============================================================
The options outstanding as of June 30, 2006 are set forth below:
Weighted Weighted
Average Average
Options Exercise Remaining
Exercise Price Outstanding Price Life (Years)
------------------------------------------------------------------
$12.50-$14.99 14,398 $ 13.11 1.74
$15.00-$17.49 29,615 16.29 3.96
$17.50-$19.99 18,583 19.45 5.50
$20.00-$22.49 31,741 21.63 5.90
------------------------------------------------------------------
Outstanding at June 30,
2006 94,337 $ 18.22 4.57
------------------------------------------------------------------
6
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
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, 2006 was $146,623.
The 2005 Equity Incentive Compensation Plan ("2005 Plan") 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 872,639 shares of the Corporation'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. 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 were
granted at fair market value on grant date. The number of shares of Common Stock
which remain available for future grants under the 2005 Plan at June 30, 2006 is
846,163 shares.
The Corporation 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 Corporations's awards granted under the 2005 Plan
as of June 30, 2006, and changes during the period then ended is presented
below:
Weighted Average
Shares/ Grant-Date Fair
Awards Units Value
------------------------------------------------------------
Balance at December 31, 2005 8,630 $28.35
Granted:
Restricted stock 13,025 34.32
Restricted stock units 4,000 33.21
Deferred stock units 584 33.63
Vested & issued (4,260) 28.06
Forfeited (486) 28.06
------------------------------------------------------------
Balance at June 30, 2006
(includes 13,025
performance-based awards and
8,468 nonperformance-based
awards) 21,493 $33.08
============================================================
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, no compensation cost is recognized and any recognized compensation cost
is reversed. The total compensation costs for restricted stock granted to
employees for the period ended June 30, 2006 were $81,175. The total
compensation costs for restricted stock units granted to non-employee directors
for the period ended June 30, 2006 were $80,533. As of June 30, 2006, there were
total unrecognized compensation costs of $577,674 related to nonvested
share-based compensation arrangements granted under the 2005 Plan. Those costs
are expected to be recognized over a weighted average period of 1.98 years.
7. EXPENSES
The aggregate remuneration paid during the six months ended June 30, 2006 to
officers and directors amounted to $1,378,329, of which $233,587 was paid as
fees and compensation to directors who were not officers. These amounts
represent the taxable income to the Corporation'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 Corporation makes loans of securities to brokers, secured by cash deposits,
U.S. Government securities, or bank letters of credit. The Corporation 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 Corporation 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 securities
loaned that may occur during the term of the loan will be for the account of the
Corporation. At June 30, 2006, the Corporation had securities on loan of
$40,738,724 and held collateral of $41,638,110, 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, -----------------------------------------------------------
2006 2005 2005 2004 2003 2002 2001
--------- -------- ------ ------ ------ ------ ------
Per Share Operating Performance
Net asset value, beginning of period $35.24 $28.16 $28.16 $24.06 $20.98 $24.90 $32.69
---------------------------------------------------------------------------------------------------------------------------
Net investment income 0.25 0.20 0.53* 0.41 0.38 0.42 0.49
Net realized gains and increase
(decrease) in
unrealized appreciation 3.62 4.45 8.29 5.05 3.89 (3.20) (6.81)
---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.87 4.65 8.82 5.46 4.27 (2.78) (6.32)
---------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends from net investment
income (0.16) (0.18) (0.56) (0.44) (0.38) (0.43) (0.43)
Distributions from net realized
gains (0.10) (0.08) (1.22) (0.88) (0.81) (0.68) (1.07)
---------------------------------------------------------------------------------------------------------------------------
Total distributions (0.26) (0.26) (1.78) (1.32) (1.19) (1.11) (1.50)
---------------------------------------------------------------------------------------------------------------------------
Capital share repurchases 0.07 0.04 0.10 0.01 0.02 0.01 0.06
Reinvestment of distributions -- -- (0.06) (0.05) (0.02) (0.04) (0.03)
---------------------------------------------------------------------------------------------------------------------------
Total capital share transactions 0.07 0.04 0.04 (0.04) 0.00 (0.03) 0.03
---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $38.92 $32.59 $35.24 $28.16 $24.06 $20.98 $24.90
===========================================================================================================================
Per share market price, end of period $33.99 $29.95 $32.34 $25.78 $23.74 $19.18 $23.46
Total Investment Return
Based on market price 5.9% 17.2% 32.3% 14.4% 30.8% (13.7)% (8.7)%
Based on net asset value 11.3% 16.8% 32.0% 23.3% 21.2% (11.1)% (19.0)%
Ratios/Supplemental Data
Net assets, end of period (in
000's) $824,479 $705,225 $761,914 $618,887 $522,941 $451,275 $526,492
Ratio of expenses to average net
assets 0.54%+ 0.61%+ 0.59% 0.56% 0.74% 0.49% 0.35%
Ratio of net investment income to
average net assets 1.30%+ 1.30%+ 1.61% 1.58% 1.75% 1.84% 1.67%
Portfolio turnover 12.46%+ 12.61%+ 10.15% 13.44% 10.20% 9.69% 6.74%
Number of shares outstanding at
end of period (in 000's) 21,184 21,643 21,621 21,980 21,737 21,510 21,148
------------------
+ Ratios presented on an annualized basis.
* In 2005 the Corporation received dividend income of $3,032,857, or $0.14 per
share, as a result of Precision Drilling Corp.'s reorganization.
8
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
June 30, 2006
Shares
or Units Value (A)
---------- -----------
Stocks And Convertible Securities -- 96.4%
Energy -- 89.8%
Integrated -- 39.4%
Aventine Renewable Energy
Holdings, Inc. 40,000 $ 1,556,000
BP plc ADR 600,000 41,766,000
Chevron Corp. 635,000 39,408,100
ConocoPhillips 556,891 36,493,067
Exxon Mobil Corp. 1,160,000 71,166,000
Hess Corp. (B) 195,000 10,305,750
Holly Corp. 420,000 20,244,000
Kerr-McGee Corp. 215,294 14,930,639
Marathon Oil Co. 120,000 9,996,000
Murphy Oil Corp. 216,500 12,093,690
Royal Dutch Shell plc ADR 275,000 18,419,500
Suncor Energy 90,000 7,290,900
Total S.A. ADR 240,000 15,724,800
Valero Energy Corp. 355,000 23,614,600
Western Refining Inc. 75,000 1,618,500
-----------
324,627,546
-----------
Exploration & Production -- 15.6%
Apache Corp. 158,200 10,797,150
Devon Energy Corp. 340,000 20,539,400
EOG Resources, Inc. (B) 320,000 22,188,800
Hugoton Royalty Trust (B) 23,843 708,137
Newfield Exploration Co. (C) 175,000 8,564,500
Noble Energy, Inc. 430,000 20,149,800
Occidental Petroleum Corp. 200,000 20,510,000
Pioneer Natural
Resources Co. 165,000 7,657,650
XTO Energy Inc. 400,000 17,708,000
-----------
128,823,437
-----------
Services -- 22.4%
Baker Hughes, Inc. 130,000 10,640,500
BJ Services Co. 740,000 27,572,400
GlobalSantaFe Corp. 290,000 16,747,500
Grant Prideco Inc. (C) 308,000 13,783,000
Hercules Offshore, Inc. (B) 150,000 5,250,000
Nabors Industries Ltd.
(B)(C) 520,000 17,570,800
Noble Corp. 200,000 14,884,000
Precision Drilling Trust (B) 300,000 9,960,000
Schlumberger Ltd. 560,000 36,461,600
TODCO (C) 175,000 7,148,750
Weatherford International,
Ltd. (C) 493,560 24,490,447
-----------
184,508,997
-----------
Shares
or Units Value (A)
---------- -----------
Utilities -- 11.8%
AGL Resources Inc. 170,000 $ 6,480,400
Duke Energy Corp. 217,624 6,391,617
Energen Corp. 400,000 15,364,000
Equitable Resources Inc. 450,000 15,075,000
MDU Resources Group, Inc. 250,000 9,152,500
National Fuel Gas Co. 200,000 7,028,000
New Jersey Resources Corp. 200,000 9,356,000
Questar Corp. 200,000 16,098,000
Semco Energy, Inc. 325,200 1,808,112
Williams Companies, Inc. 450,000 10,512,000
------------
97,265,629
------------
Coals -- 0.6%
Arch Coal Inc. 30,000 1,271,100
Consol Energy Inc. 80,000 3,737,600
------------
5,008,700
------------
Basic Industries -- 6.6%
Basic Materials & Other -- 6.6%
Air Products and
Chemicals, Inc. 125,000 7,990,000
Aqua America, Inc. 380,000 8,660,200
Arkema Inc. 6,000 225,900
du Pont (E.I.) de Nemours
and Co. 157,500 6,552,000
Florida Rock Industries Inc. 75,000 3,725,250
General Electric Co. 454,800 14,990,208
Martin Marietta Materials,
Inc. 30,000 2,734,500
Rohm & Haas Co. 200,000 10,024,000
------------
54,902,058
------------
Total Stocks And Convertible Securities
(Cost $328,230,601) (D) $795,136,367
------------
9
SCHEDULE OF INVESTMENTS (CONTINUED)
--------------------------------------------------------------------------------
June 30, 2006
Prin. Amt. Value (A)
----------- ---------
Short-Term Investments -- 3.1%
U.S. Government Obligations -- 2.1%
U.S. Treasury Bills
4.74%, due 8/17/06 $17,500,000 $17,391,704
-----------
Time Deposit -- 0.0%
Wachovia Corp.,
4.50%, due 7/3/06 112,494
-----------
Commercial Paper -- 1.0%
American General Finance,
Inc.,
5.24-5.25%, due
7/13/06-7/20/06 3,500,000 3,492,760
Chevron Funding Co.,
5.23%, due 7/18/06 2,000,000 1,995,061
General Electric Capital
Corp., 5.21%, due 7/6/06 1,300,000 1,299,059
Toyota Motor Credit Corp.,
5.21%, due 7/11/06 1,000,000 998,553
-----------
7,785,433
-----------
Total Short-Term Investments
(Cost $25,289,631) $25,289,631
-----------
Value (A)
----------
Securities Lending Collateral -- 5.1%
Brown Brothers Investment Trust,
5.16%, due 7/3/06 $41,638,110
-----------
Total Securities Lending Collateral
(Cost $41,638,110) 41,638,110
-----------
Total Investments -- 104.6%
(Cost $395,158,342) 862,064,108
Cash, receivables, prepaid expenses
and other assets, less
liabilities -- (4.6)% (37,585,524)
------------
Net Assets -- 100.0% $824,478,584
============
================================================================================
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) Some of the shares of this company are on loan. See note 8 to financial
statements.
(C) Presently non-dividend paying.
(D) The aggregate market value of stocks held in escrow at June 30, 2006
covering open call option contracts written was $10,244,778. In addition,
the aggregate market value of securities segregated by the Corporation's
custodian required to collateralize open put option contracts written was
$11,865,000.
HISTORICAL FINANCIAL STATISTICS
------------------------------------------------------------------------------------------------------------------------
Dividends Distributions
Net from from
Asset Net Investment Net Realized
Value of Shares Value per Income Gains
December 31 Net Assets Outstanding* Share* per Share* per Share*
----------- -------------- ------------ ---------- -------------- -------------
1996........................... $ 484,588,990 19,598,729 $ 24.73 $ .55 $ .88
1997........................... 556,452,549 20,134,181 27.64 .51 1.04
1998........................... 474,821,118 20,762,063 22.87 .52 1.01
1999........................... 565,075,001 21,471,270 26.32 .48 1.07
2000........................... 688,172,867 21,053,644 32.69 .39 1.35
2001........................... 526,491,798 21,147,563 24.90 .43 1.07
2002........................... 451,275,463 21,510,067 20.98 .43 .68
2003........................... 522,941,279 21,736,777 24.06 .38 .81
2004........................... 618,887,401 21,979,676 28.16 .44 .88
2005........................... 761,913,652 21,621,072 35.24 .56 1.22
June 30, 2006.................. 824,478,584 21,183,656 38.92 .29+ .10+
------------------
* Adjusted to reflect the 3-for-2 stock split effected in October 2000.
+ Paid or declared.
10
PORTFOLIO SUMMARY
--------------------------------------------------------------------------------
June 30, 2006
TEN LARGEST PORTFOLIO HOLDINGS
Market Value % of Net Assets
------------------------------------------------------------------------
Exxon Mobil Corp $ 71,166,000 8.6
BP plc ADR 41,766,000 5.1
Chevron Corp. 39,408,100 4.8
ConocoPhillips 36,493,067 4.4
Schlumberger Ltd. 36,461,600 4.4
BJ Services Co. 27,572,400 3.3
Weatherford International, Ltd. 24,490,447 3.0
Valero Energy Corp. 23,614,600 2.9
EOG Resources, Inc. 22,188,800 2.7
Devon Energy Corp. 20,539,400 2.5
---------------- ----
Total $ 343,700,414 41.7%
---------------- ----
SECTOR WEIGHTINGS
[GRAPHIC APPEARS HERE]
Integrated 39.4%
Exploration & Production 15.6%
Services 22.4%
Utilities 11.8%
Coals 0.6%
Basic Materials & Other 6.6%
Cash & Equivalent 3.1%
11
SCHEDULE OF OUTSTANDING OPTION CONTRACTS
----------------------------------------------------------------------------------------------------------------------
June 30, 2006
Contracts Contract
(100 shares Strike Expiration Appreciation/
each) Security Price Date (Depreciation)
----------------------------------------------------------------------------------------------------------------------
COVERED CALLS
59 Air Products and Chemicals, Inc............................. $ 70 Sep 06 $ 3,953
100 Apache Corp................................................. 85 Jul 06 12,199
200 Arch Coal Inc............................................... 45 Jul 06 (2,801)
300 Consol Energy Inc........................................... 45 Oct 06 (166,700)
30 Martin Marietta Materials, Inc.............................. 140 Oct 06 3,810
100 Murphy Oil Corp............................................. 55 Jul 06 (8,801)
200 Newfield Exploration Co..................................... 50 Sep 06 (55,135)
100 Rohm & Haas Co.............................................. 55 Oct 06 1,700
500 Total S.A. ADR.............................................. 75 Aug 06 (25,751)
100 XTO Energy Inc.............................................. 45 Aug 06 (7,800)
100 XTO Energy Inc.............................................. 50 Aug 06 2,700
100 XTO Energy Inc.............................................. 55 Aug 06 13,200
---------- --------
1,889 (229,426)
---------- --------
COLLATERALIZED PUTS
245 Arch Coal Inc.............................................. 30 Jul 06 14,332
100 Baker Hughes, Inc.......................................... 55 Jul 06 14,199
75 Baker Hughes, Inc.......................................... 60 Jul 06 8,400
100 Florida Rock Industries Inc................................ 45 Sep 06 (7,800)
100 Grant Prideco Inc.......................................... 35 Jul 06 12,699
200 Marathon Oil Co............................................ 60 Jul 06 27,399
75 Marathon Oil Co............................................ 65 Jul 06 18,149
100 Marathon Oil Co............................................ 75 Jul 06 8,700
100 Marathon Oil Co............................................ 55 Oct 06 9,200
85 Martin Marietta Materials, Inc............................. 80 Jul 06 9,944
100 Suncor Energy.............................................. 65 Jul 06 9,200
100 Suncor Energy.............................................. 70 Jul 06 16,199
200 Suncor Energy.............................................. 60 Sep 06 8,399
150 TODCO...................................................... 30 Jul 06 13,050
150 TODCO...................................................... 35 Jul 06 9,299
100 TODCO...................................................... 40 Jul 06 (5,300)
150 TODCO...................................................... 30 Sep 06 4,050
100 Valero Energy Corp......................................... 57.50 Jul 06 10,700
150 Valero Energy Corp......................................... 47.50 Sep 06 10,049
---------- -----------
2,380 190,868
---------- -----------
$ (38,558)
===========
12
CHANGES IN PORTFOLIO SECURITIES
-------------------------------------------------------------------------------------------------------------------------
During the Three Months Ended June 30, 2006
(unaudited)
Shares or Units
---------------------------
Held
Additions Reductions June 30, 2006
---------- ---------- -------------
Arch Coal Inc.............................................................. 120,000(1) 290,000 30,000
Arkema Inc................................................................. 6,000(2) 6,000
Aventine Renewable Energy Holdings, Inc.................................... 40,000 40,000
ConocoPhillips............................................................. 46,891(3) 556,891
Consol Energy Inc.......................................................... 160,000(1) 240,000 80,000
Exxon Mobil Corp........................................................... 20,000 1,160,000
Hercules Offshore, Inc..................................................... 40,000 150,000
Hess Corp.................................................................. 130,000(1) 195,000
Holly Corp................................................................. 210,000(1) 420,000
Hugoton Royalty Trust...................................................... 23,843(4) 23,843
Kerr-McGee Corp............................................................ 112,647(5) 5,000 215,294
Marathon Oil Co............................................................ 10,000 120,000
Nabors Industries Ltd...................................................... 260,000(1) 520,000
Noble Corp................................................................. 15,000 200,000
Schlumberger Ltd........................................................... 280,000(1) 560,000
Semco Energy, Inc.......................................................... 325,200 325,200
Suncor Energy.............................................................. 90,000 90,000
Total S.A. ADR............................................................. 120,000(1) 240,000
Tronox Inc. Class A........................................................ 21,705 21,705 --
Tronox Inc. Class B........................................................ 1,000 22,705 --
Valero Energy Corp......................................................... 115,000 355,000
Western Refining Inc....................................................... 75,000 350,000 75,000
Apache Corp................................................................ 6,800 158,200
Burlington Resources Inc................................................... 65,000(3) --
Murphy Oil Corp............................................................ 33,500 216,500
Pioneer Natural Resources Co............................................... 10,000 165,000
Smurfit-Stone Container Corp............................................... 300,000 --
------------------
(1) By stock split.
(2) Received .05 shares for each share of Total S.A. ADR held.
(3) Received .7214 shares of ConocoPhillips and $46.50 in cash in exchange for
each share of Burlington Resources Inc. held.
(4) Received .059609 shares for each share of XTO Energy Inc. held.
(5) Received 107,647 shares by stock split.
----------
Common Stock
Listed on the New York Stock Exchange
and the Pacific Exchange
Petroleum & Resources Corporation
Seven St. Paul Street, Suite 1140, Baltimore, MD 21202
(410) 752-5900 or (800) 638-2479
Website: www.peteres.com
E-mail: contact@peteres.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.
13
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF PETROLEUM & RESOURCES CORPORATION:
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 Petroleum & Resources Corporation
(hereafter referred to as the "Corporation") at June 30, 2006, and 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 Corporation'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, 2006 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
July 13, 2006
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 shareholders, the Corporation 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
Corporation's Forms N-Q are available on the Commission's website at
www.sec.gov. The Corporation'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 1-800-SEC-0330. The Corporation
also posts its Forms N-Q on its website at: www.peteres.com under the heading
"Financial Reports".
PROXY VOTING POLICIES AND RECORD
A description of the policies and procedures that the Corporation uses to
determine how to vote proxies relating to portfolio securities owned by the
Corporation and information as to how the Corporation voted proxies relating to
portfolio securities during the 12 month period ended June 30, 2006 are
available (i) without charge, upon request, by calling the Corporation's toll
free number at (800) 638-2479; (ii) on the Corporation'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, Petroleum & Resources Corporation 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.
14
SHAREHOLDER INFORMATION AND SERVICES
--------------------------------------------------------------------------------
DIVIDEND PAYMENT SCHEDULE
The Corporation 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
elections 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 Petroleum & Resources 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 Shareholders
For shareholders 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 Corporation
Petroleum & Resources Corporation
Lawrence L. Hooper, Jr.
Vice President, General Counsel and Secretary
Seven St. Paul Street, Suite 1140, Baltimore, MD 21202
(800) 638-2479
Website: www.peteres.com
E-mail: contact@peteres.com
The Transfer Agent
American Stock Transfer & Trust Company
Address Shareholder Inquiries to:
Shareholder Relations Department
59 Maiden Lane
New York, NY 10038
(866) 723-8330
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.
15
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. 2006 51,250 $ 34.92 51,250 983,427
Feb. 2006 88,000 $ 33.63 88,000 895,427
Mar. 2006 98,500 $ 32.81 98,500 796,427
Apr. 2006 59,400 $ 34.43 59,400 737,527
May 2006 60,200 $ 34.33 60,200 677,327
June 2006 97,350 $ 31.75 97,350 579,977
-------- --------- --------- --------- ---------
Total 454,700(1) $ 33.39 454,700(2) 579,977(2)
(1) There were no shares purchased other than through a
publicly announced plan or program.
(2.a) The Plan was announced on December 9, 2004 and was
reapproved on December 8, 2005.
(2.b) The share amount approved in 2004 was 5% of
outstanding shares, or approximately 1,080,746 shares, and
in 2005 was 5% of outstanding shares, or approximately
1,060,377 shares.
(2.c) The Plan will expire on or about December 8, 2006.
(2.d) None.
(2.e) None.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which
shareholders may recommend nominees to the registrant's
board of directors made or implemented after the registrant
last provided disclosure in response to the requirements of
Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or
this Item.
Item 11. Controls and Procedures.
Conclusions of principal officers concerning controls and
procedures.
(a) As of July 12, 2006, 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 12, 2006, 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.
PETROLEUM & RESOURCES CORPORATION
BY: /s/ Douglas G. Ober
-----------------------
Douglas G. Ober
Chief Executive Officer
(Principal Executive Officer)
Date: July 26, 2006
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 26, 2006
BY: /s/ Maureen A. Jones
-----------------------
Maureen A. Jones
Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
Date: July 26, 2006