##### Table of Contents



United States Securities and Exchange Commission
 Washington, D.C. 20549
 Form 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 Commission file number 000-24498
 DIAMOND HILL INVESTMENT GROUP, INC.
  Ohio
    
    65-0190407(State of incorporation)
    
    (I.R.S. Employer Identification No.)
 325 John H. McConnell Blvd, Suite 200, Columbus, Ohio 43215
 (614) 255-3333
 þ o
 o o
 
 Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



PAGEPart I: FINANCIAL INFORMATION
    
    
    3Item 1.
    
    Consolidated Financial Statements
    
    
    3Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    22Item 4.
    
    Controls and Procedures
    
    
    22Part II: OTHER INFORMATION
    
    
    22Item 1.
    
    Legal Proceedings
    
    
    22Item 1A.
    
    Risk Factors
    
    
    22Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 3.
    
    Defaults Upon Senior Securities
    
    
    22Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    23Item 5.
    
    Other Information
    
    
    23Item 6.
    
    Exhibits
    
    
    24Signatures
    
    
    25Exhibit 31.1Exhibit 31.2Exhibit 32.1
   2




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##### Table of Contents



PART I: FINANCIAL INFORMATION
 
 ITEM 1: Consolidated Financial Statements
 Diamond Hill Investment Group, Inc.
Consolidated Balance Sheets
 6/30/2010
    
    
    12/31/2009(Unaudited)ASSETSCash and cash equivalents
    
    $
    18,714,468
    
    
    $
    11,513,194Investment portfolio
    
    
    15,462,435
    
    
    
    16,429,967Accounts receivable
    
    
    7,835,467
    
    
    
    10,144,004Prepaid expenses
    
    
    651,651
    
    
    
    724,825Furniture and Equipment, net of depreciation, and other assets
    
    
    1,062,327
    
    
    
    1,171,670Income tax receivable
    
    
    38,317
    
    
    
    Deferred taxes
    
    
    1,312,224
    
    
    
    520,965Total assets
    
    $
    45,076,889
    
    
    $
    40,504,625LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesAccounts payable and accrued expenses
    
    $
    2,382,458
    
    
    $
    4,465,011Accrued incentive compensation
    
    
    8,365,000
    
    
    
    12,300,650Income tax payable
    
    
    
    
    
    
    758,257Total liabilities
    
    
    10,747,458
    
    
    
    17,523,918Commitments and contingencies
    
    
    
    
    
    
    Shareholders EquityCommon stock, no par value
7,000,000 shares authorized;
2,777,177 issued and outstanding at June 30, 2010;
2,677,577 issued and outstanding at December 31, 2009
    
    
    33,083,282
    
    
    
    26,922,484Preferred stock, undesignated, 1,000,000 shares
authorized and unissued
    
    
    
    
    
    
    Deferred compensation
    
    
    (7,382,949
    )
    
    
    (8,070,697
    )Retained earnings
    
    
    8,629,098
    
    
    
    4,128,920Total shareholders equity
    
    
    34,329,431
    
    
    
    22,980,707Total liabilities and shareholders equity
    
    $
    45,076,889
    
    
    $
    40,504,625Book value per share
    
    $
    12.36
    
    
    $
    8.58
  3




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Diamond Hill Investment Group, Inc.
Consolidated Statements of Income (unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009REVENUES:Investment advisory
    
    $
    11,933,346
    
    
    $
    8,467,852
    
    
    $
    23,413,871
    
    
    $
    16,256,795Mutual fund administration, net
    
    
    1,820,889
    
    
    
    1,124,980
    
    
    
    3,731,272
    
    
    
    2,220,372Total revenue
    
    
    13,754,235
    
    
    
    9,592,832
    
    
    
    27,145,143
    
    
    
    18,477,167OPERATING EXPENSES:Compensation and related costs
    
    
    7,829,875
    
    
    
    5,385,309
    
    
    
    15,611,553
    
    
    
    10,523,404General and administrative
    
    
    871,754
    
    
    
    745,740
    
    
    
    1,683,062
    
    
    
    1,391,920Sales and marketing
    
    
    199,632
    
    
    
    136,844
    
    
    
    338,020
    
    
    
    282,432Third party distribution
    
    
    258,880
    
    
    
    215,742
    
    
    
    517,655
    
    
    
    464,412Mutual fund administration
    
    
    492,181
    
    
    
    577,860
    
    
    
    964,336
    
    
    
    1,155,045Total operating expenses
    
    
    9,652,322
    
    
    
    7,061,495
    
    
    
    19,114,626
    
    
    
    13,817,213NET OPERATING INCOME
    
    
    4,101,913
    
    
    
    2,531,337
    
    
    
    8,030,517
    
    
    
    4,659,954Investment return
    
    
    (1,183,703
    )
    
    
    4,031,896
    
    
    
    (938,786
    )
    
    
    2,453,045INCOME BEFORE TAXES
    
    
    2,918,210
    
    
    
    6,563,233
    
    
    
    7,091,731
    
    
    
    7,112,999Income tax provision
    
    
    (1,088,352
    )
    
    
    (2,247,738
    )
    
    
    (2,591,553
    )
    
    
    (2,445,271
    )NET INCOME
    
    $
    1,829,858
    
    
    $
    4,315,495
    
    
    $
    4,500,178
    
    
    $
    4,667,728Earnings per shareBasic
    
    $
    0.66
    
    
    $
    1.66
    
    
    $
    1.64
    
    
    $
    1.83Diluted
    
    $
    0.66
    
    
    $
    1.66
    
    
    $
    1.64
    
    
    $
    1.82Weighted average shares outstandingBasic
    
    
    2,773,533
    
    
    
    2,598,178
    
    
    
    2,746,455
    
    
    
    2,553,562Diluted
    
    
    2,774,318
    
    
    
    2,602,637
    
    
    
    2,748,775
    
    
    
    2,558,119
  4




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Diamond Hill Investment Group, Inc.
Consolidated Statements of Cash Flow (unaudited)
 Six Months Ended June 30,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net Income
    
    $
    4,500,178
    
    
    $
    4,667,728Adjustments to reconcile net income to net cash provided by
(used in) operating activities:Depreciation on furniture and equipment
    
    
    162,213
    
    
    
    112,531Amortization of deferred compensation
    
    
    1,176,658
    
    
    
    840,435(Increase) decrease in accounts receivable
    
    
    2,308,537
    
    
    
    (120,432
    )Change in deferred taxes
    
    
    (792,887
    )
    
    
    513,773Noncash director fee expense
    
    
    179,836
    
    
    
    150,062Investment (gain) loss, net
    
    
    967,532
    
    
    
    (577,134
    )Decrease in accrued liabilities
    
    
    (1,015,057
    )
    
    
    (3,506,497
    )Other changes in assets and liabilities
    
    
    (685,086
    )
    
    
    2,594,488Net cash provided by operating activities
    
    
    6,801,924
    
    
    
    4,674,954CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    (52,870
    )
    
    
    (329,502
    )Cost of investments purchased and other portfolio activity
    
    
    
    
    
    
    (9,727,397
    )Proceeds from sale of investments
    
    
    
    
    
    
    5,460,937Net cash used in investing activities
    
    
    (52,870
    )
    
    
    (4,595,962
    )CASH FLOWS FROM FINANCING ACTIVITIES:Payment of taxes withheld on employee stock transactions
    
    
    (11,360
    )
    
    
    (26,865
    )Proceeds from common stock issuance
    
    
    463,580
    
    
    
    438,010Net cash provided by financing activities
    
    
    452,220
    
    
    
    411,145CASH AND CASH EQUIVALENTSNet change during the period
    
    
    7,201,274
    
    
    
    490,137At beginning of period
    
    
    11,513,194
    
    
    
    15,788,560At end of period
    
    $
    18,714,468
    
    
    $
    16,278,697Cash paid during the period for:Interest
    
    $
    
    
    
    $
    Income taxes
    
    
    4,142,700
    
    
    
    610,090Noncash transactions during the period for:Common stock issued as incentive compensation
    
    
    5,003,146
    
    
    
    4,852,216
  5




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Diamond Hill Investment Group, Inc.
Notes to Consolidated Financial Statements (unaudited)
 Organization
     Significant Accounting Policies
  Principles of Consolidation
  Segment Information
  Cash and Cash Equivalents
   6




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Significant Accounting Policies (Continued)
 Accounts Receivable
  Valuation of Investment Portfolio
   Limited Partnership Interests
      7




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Significant Accounting Policies (Continued)
 Furniture and Equipment
  Revenue Recognition  General
  Revenue Recognition  Performance Incentive Revenue
  As Of June 30,2010
    
    
    2009AUM  Contractual Period Ends Quarterly
    
    $
    99,737,213
    
    
    $
    101,882,369AUM  Contractual Period Ends Annually
    
    
    170,047,709
    
    
    
    74,652,767Total AUM Subject to Performance
Incentive
    
    $
    269,784,922
    
    
    $
    176,535,136
 For The Three Months Ending June 30,
    
    
    For The Six Months Ending June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Performance Incentive Fees  Method 1
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    4,645Performance Incentive Fees  Method 2
    
    $
    
    
    
    $
    
    
    
    $
    56,488
    
    
    $
    4,645
 Revenue Recognition  Mutual Fund Administration
   8




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Significant Accounting Policies (Continued)
 Revenue Recognition  Mutual Fund Administration (Continued)
    Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Mutual fund administration:Administration revenue, gross
    
    $
    2,756,455
    
    
    $
    2,143,844
    
    
    $
    5,562,566
    
    
    $
    3,990,06812b-1/service fees and commission revenue
received from fund clients
    
    
    2,092,674
    
    
    
    1,342,628
    
    
    
    4,319,661
    
    
    
    1,342,62812b-1/service fees and commission expense
payments to third parties
    
    
    (2,092,674
    )
    
    
    (1,342,628
    )
    
    
    (4,319,661
    )
    
    
    (1,342,628
    )Fund related expense
    
    
    (948,869
    )
    
    
    (984,879
    )
    
    
    (1,876,074
    )
    
    
    (1,699,570
    )Revenue, net of fund related expenses
    
    
    1,807,586
    
    
    
    1,158,965
    
    
    
    3,686,492
    
    
    
    2,290,498C-Share financing:Broker commission advance repayments
    
    
    162,423
    
    
    
    176,015
    
    
    
    321,364
    
    
    
    523,468Broker commission amortization
    
    
    (149,120
    )
    
    
    (210,000
    )
    
    
    (276,584
    )
    
    
    (593,594
    )Financing activity, net
    
    
    13,303
    
    
    
    (33,985
    )
    
    
    44,780
    
    
    
    (70,126
    )Mutual fund administration revenue, net
    
    $
    1,820,889
    
    
    $
    1,124,980
    
    
    $
    3,731,272
    
    
    $
    2,220,372
 Third Party Distribution Expense
   9




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Significant Accounting Policies (Continued)
 Income Taxes
   Earnings Per Share
  Reclassifications
  Investment Portfolio
  June 30,
    
    
    December 31,2010
    
    
    2009Diamond Hill Small Cap Fund
    
    $
    714,191
    
    
    $
    709,881Diamond Hill Small-Mid Cap Fund
    
    
    781,874
    
    
    
    785,714Diamond Hill Large Cap Fund
    
    
    625,878
    
    
    
    684,554Diamond Hill Select Fund
    
    
    652,582
    
    
    
    705,790Diamond Hill Long-Short Fund
    
    
    549,889
    
    
    
    606,800Diamond Hill Strategic Income Fund
    
    
    639,733
    
    
    
    615,431Diamond Hill Investment Partners, L.P.
    
    
    2,379,901
    
    
    
    2,653,856Diamond Hill Investment Partners II, L.P.
    
    
    2,374,078
    
    
    
    2,649,665Diamond Hill Research Partners, L.P.
    
    
    6,744,309
    
    
    
    7,018,276Total Investment Portfolio
    
    $
    15,462,435
    
    
    $
    16,429,967
   10




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##### Table of Contents



Investment Portfolio (Continued)
 June 30,
    
    
    December 31,2010
    
    
    2009Total partnership assets
    
    $
    157,160,581
    
    
    $
    188,716,374Total partnership liabilities
    
    
    23,671,826
    
    
    
    40,583,059Net partnership assets
    
    
    133,488,755
    
    
    
    148,133,315Net partnership income (loss)
    
    
    (15,587,020
    )
    
    
    35,193,357DHCMs portion of net assets
    
    
    11,498,288
    
    
    
    12,321,797DHCMs portion of net income (loss)
    
    
    (823,509
    )
    
    
    4,634,391
  Capital Stock
 Common Shares
  Authorization of Preferred Shares
  Stock-Based Compensation
 Equity Incentive Plans
 2005 Employee and Director Equity Incentive Plan
  401(k) Plan
   11




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##### Table of Contents



Stock-Based Compensation (Continued)
 Stock Options and Warrants
  WarrantsWeighted AverageShares
    
    
    Exercise PriceOutstanding December 31, 2008
    
    
    10,000
    
    
    $
    13.00Exercisable December 31, 2008
    
    
    10,000
    
    
    $
    13.00Granted
    
    
    
    
    
    
    Expired/Forfeited
    
    
    
    
    
    
    Exercised
    
    
    4,000
    
    
    
    16.88Outstanding June 30, 2009
    
    
    6,000
    
    
    $
    10.42Exercisable June 30, 2009
    
    
    6,000
    
    
    $
    10.42Outstanding December 31, 2009
    
    
    6,000
    
    
    $
    10.42Exercisable December 31, 2009
    
    
    6,000
    
    
    $
    10.42Granted
    
    
    
    
    
    
    Expired/Forfeited
    
    
    4,000
    
    
    
    10.00Exercised
    
    
    2,000
    
    
    
    11.25Outstanding June 30, 2010
    
    
    
    
    
    $
    Exercisable June 30, 2010
    
    
    
    
    
    $
    
 Operating Leases
  2010
    
    2011
    
    2012
    
    2013
    
    2014
    
    Thereafter$181,000
    
    $340,000
    
    $348,000
    
    $356,000
    
    $358,000
    
    $571,000
   12




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##### Table of Contents



Income Taxes
  Earnings Per Share
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Basic and Diluted net income
    
    $
    1,829,858
    
    
    $
    4,315,495
    
    
    $
    4,500,178
    
    
    $
    4,667,728Weighted average number of
outstanding sharesBasic
    
    
    2,773,533
    
    
    
    2,598,178
    
    
    
    2,746,455
    
    
    
    2,553,562Diluted
    
    
    2,774,318
    
    
    
    2,602,637
    
    
    
    2,748,775
    
    
    
    2,558,119Earnings per shareBasic
    
    $
    0.66
    
    
    $
    1.66
    
    
    $
    1.64
    
    
    $
    1.83Diluted
    
    $
    0.66
    
    
    $
    1.66
    
    
    $
    1.64
    
    
    $
    1.82
 Regulatory Requirements
  June 30,
    
    
    December 31,2010
    
    
    2009Net Capital
    
    $
    197,020
    
    
    $
    279,718Minimum Net Capital
Requirement
    
    
    67,673
    
    
    
    132,199Ratio of Aggregate
Indebtedness
to Net Capital
    
    5.15 to 1
    
    
    7.09 to 1
 Commitments and Contingencies
   13




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ITEM 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-looking Statements
  General
     14




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Assets Under Management
  Assets Under Management by ProductAs of June 30,(in millions)
    
    2010
    
    
    2009
    
    
    % ChangeMutual funds
    
    $
    3,781
    
    
    $
    2,930
    
    
    
    29
    %Separate accounts
    
    
    2,505
    
    
    
    1,600
    
    
    
    57
    %Private investment funds
    
    
    196
    
    
    
    203
    
    
    
    -3
    %Total
    
    $
    6,482
    
    
    $
    4,733
    
    
    
    37
    %
 Assets Under Management by ObjectiveAs of June 30,(in millions)
    
    2010
    
    
    2009
    
    
    % ChangeSmall
    
    $
    735
    
    
    $
    476
    
    
    
    54
    %Small-Mid Cap
    
    
    149
    
    
    
    113
    
    
    
    32
    %Large Cap
    
    
    2,870
    
    
    
    1,706
    
    
    
    68
    %Select
    
    
    370
    
    
    
    156
    
    
    
    137
    %Long-Short
    
    
    2,188
    
    
    
    2,149
    
    
    
    2
    %Strategic and fixed income
    
    
    170
    
    
    
    133
    
    
    
    28
    %Total
    
    $
    6,482
    
    
    $
    4,733
    
    
    
    37
    %
 Change in Assets Under ManagementFor the Six Months Ended June 30,(in millions)
    
    2010
    
    
    2009AUM at beginning of the period
    
    $
    6,283
    
    
    $
    4,510Net cash inflows (outflows)mutual funds
    
    
    439
    
    
    
    (269
    )separate accounts
    
    
    290
    
    
    
    343private investment funds
    
    
    (0
    )
    
    
    (38
    )729
    
    
    
    36Net market appreciation (depreciation) and income
    
    
    (530
    )
    
    
    187Increase during the period
    
    
    199
    
    
    
    223AUM at end of the period
    
    $
    6,482
    
    
    $
    4,733
  15




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##### Table of Contents



Consolidated Results of Operations
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,(in thousands, except per share amounts)
    
    2010
    
    
    2009
    
    
    % Change
    
    
    2010
    
    
    2009
    
    
    % ChangeNet
operating income after tax (a)
    
    $
    2,572
    
    
    $
    1,664
    
    
    
    55
    %
    
    $
    5,328
    
    
    $
    3,058
    
    
    
    74
    %Net income
    
    $
    1,830
    
    
    $
    4,315
    
    
    
    -58
    %
    
    $
    4,500
    
    
    $
    4,668
    
    
    
    -4
    %Net operating income after tax per share(a)Basic
    
    $
    0.93
    
    
    $
    0.64
    
    
    
    45
    %
    
    $
    1.94
    
    
    $
    1.20
    
    
    
    62
    %Diluted
    
    $
    0.93
    
    
    $
    0.64
    
    
    
    45
    %
    
    $
    1.94
    
    
    $
    1.20
    
    
    
    62
    %Net income per shareBasic
    
    $
    0.66
    
    
    $
    1.66
    
    
    
    -60
    %
    
    $
    1.64
    
    
    $
    1.83
    
    
    
    -10
    %Diluted
    
    $
    0.66
    
    
    $
    1.66
    
    
    
    -60
    %
    
    $
    1.64
    
    
    $
    1.82
    
    
    
    -10
    %Weighted average shares outstandingBasic
    
    
    2,774
    
    
    
    2,598
    
    
    
    
    
    
    
    2,746
    
    
    
    2,554Diluted
    
    
    2,774
    
    
    
    2,603
    
    
    
    
    
    
    
    2,749
    
    
    
    2,558
 (a) 
    
    Net operating income after tax is a non-GAAP performance measure. See Use of Supplemental
Data as Non-GAAP Performance Measure on page 21 of this report. Three Months Ended June 30, 2010 compared with Three Months Ended June 30, 2009
  Revenue
 Three Months EndedJune 30,(in thousands)
    
    2010
    
    
    2009
    
    
    % ChangeInvestment advisory
    
    $
    11,933
    
    
    $
    8,468
    
    
    
    41
    %Mutual fund administration, net
    
    
    1,821
    
    
    
    1,125
    
    
    
    62
    %Total
    
    $
    13,754
    
    
    $
    9,593
    
    
    
    43
    %
  Investment Advisory Fees.
  16




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##### Table of Contents



Mutual Fund Administration Fees.
 Expenses
 Three Months EndedJune 30,(in thousands)
    
    2010
    
    
    2009
    
    
    % ChangeCompensation and related costs
    
    $
    7,830
    
    
    $
    5,385
    
    
    
    45
    %General and administrative
    
    
    872
    
    
    
    745
    
    
    
    17
    %Sales and marketing
    
    
    199
    
    
    
    137
    
    
    
    45
    %Third party distribution
    
    
    259
    
    
    
    216
    
    
    
    20
    %Mutual fund administration
    
    
    492
    
    
    
    578
    
    
    
    -15
    %Total
    
    $
    9,652
    
    
    $
    7,061
    
    
    
    37
    %
 Compensation and Related Costs.
 General and Administrative.
 Sales and Marketing.
 Third Party Distribution.
  17




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##### Table of Contents



Mutual Fund Administration.
 Six Months Ended June 30, 2010 compared with Six Months Ended June 30, 2009
  Revenue
 Six Months EndedJune 30,(in thousands)
    
    2010
    
    
    2009
    
    
    % ChangeInvestment advisory
    
    $
    23,414
    
    
    $
    16,257
    
    
    
    44
    %Mutual fund administration, net
    
    
    3,731
    
    
    
    2,220
    
    
    
    68
    %Total
    
    $
    27,145
    
    
    $
    18,477
    
    
    
    47
    %
  Investment Advisory Fees.
 Mutual Fund Administration Fees.
  18




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##### Table of Contents



Expenses
 Six Months EndedJune 30,(in thousands)
    
    2010
    
    
    2009
    
    
    % ChangeCompensation and related costs
    
    $
    15,612
    
    
    $
    10,523
    
    
    
    48
    %General and administrative
    
    
    1,683
    
    
    
    1,392
    
    
    
    21
    %Sales and marketing
    
    
    338
    
    
    
    283
    
    
    
    19
    %Third party distribution
    
    
    518
    
    
    
    464
    
    
    
    12
    %Mutual fund administration
    
    
    964
    
    
    
    1,155
    
    
    
    -17
    %Total
    
    $
    19,115
    
    
    $
    13,817
    
    
    
    38
    %
 Compensation and Related Costs.
 General and Administrative.
 Sales and Marketing.
 Third Party Distribution.
 Mutual Fund Administration.
 Beacon Hill Fund Services
   19




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Revenue1
    
    $
    402
    
    
    $
    187
    
    
    $
    783
    
    
    $
    291Expenses
    
    
    607
    
    
    
    436
    
    
    
    1,217
    
    
    
    920Net loss
    
    $
    (205
    )
    
    $
    (249
    )
    
    $
    (434
    )
    
    $
    (629
    )
 1
    
    Beacon Hills revenue for the three months ended June 30, 2010 and 2009 includes
$131 thousand and $34 thousand, respectively, of inter-company revenue earned from services
provided to DHCM. Beacon Hills revenue for the six months ended June 30, 2010 and 2009
includes $241 thousand and $50 thousand, respectively, of inter-company revenue earned from
services provided to DHCM. These amounts have been eliminated from the Consolidated Statements
of Income. Liquidity and Capital Resources
    Use of Supplemental Data as Non-GAAP Performance Measure  Net Operating Income After Tax
    20




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##### Table of Contents



Three Months Ended June 30,
    
    
    Six Months Ended June 30,(in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net Operating Income, GAAP basis
    
    $
    4,102
    
    
    $
    2,531
    
    
    $
    8,031
    
    
    $
    4,660Non-GAAP Adjustments:Tax Provision excluding impact of Investment Return
    
    
    1,530
    
    
    
    867
    
    
    
    2,703
    
    
    
    1,602Net operating income after tax, non-GAAP basis
    
    
    2,572
    
    
    
    1,664
    
    
    
    5,328
    
    
    
    3,058Net operating income after tax per basic share, non-GAAP basis
    
    $
    0.93
    
    
    $
    0.64
    
    
    $
    1.94
    
    
    $
    1.20Net operating income after tax per diluted share, non-GAAP basis
    
    $
    0.93
    
    
    $
    0.64
    
    
    $
    1.94
    
    
    $
    1.20Basic weighted average shares outstanding, GAAP basis
    
    
    2,774
    
    
    
    2,598
    
    
    
    2,746
    
    
    
    2,554Diluted weighted average shares outstanding, GAAP basis
    
    
    2,774
    
    
    
    2,603
    
    
    
    2,749
    
    
    
    2,558
 Off-Balance Sheet Arrangements
  Critical Accounting Policies and Estimates
   21




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##### Table of Contents



ITEM 3:
    
    Quantitative and Qualitative Disclosures About Market Risk
  
 ITEM 4:
    
    Controls and Procedures
  
 PART II:
    
    OTHER INFORMATION
 
 ITEM 1:
    
    Legal Proceedings
  
 ITEM 1A:
    
    Risk Factors
  
 ITEM 2:
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  
 ITEM 3:
    
    Defaults Upon Senior Securities
   22




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##### Table of Contents



ITEM 4:
    
    (Removed and Reserved)
  
 ITEM 5:
    
    Other Information
   23




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##### Table of Contents



ITEM 6:
    
    Exhibits
 3.1
    
    Amended and Restated Articles of Incorporation of the Company. (Incorporated by
reference from Form 8-K Current Report for the event on May 2, 2002 filed with the SEC
on May 7, 2002; File No. 000-24498.)3.2
    
    Code of Regulations of the Company. (Incorporated by reference from Form 8-K Current
Report for the event on May 2, 2002 filed with the SEC on May 7, 2002; File No.
000-24498.)31.1
    
    Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).31.2
    
    Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).32.1
    
    Section 1350 Certifications.
  24




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##### Table of Contents



SIGNATURES
   Date
    
    Title
    
    SignatureAugust 6, 2010
    
    President, Chief Executive Officer,
    
    /s/ R. H. Dillonand a Director
    
    R. H. DillonAugust 6, 2010
    
    Chief Financial Officer, Treasurer,
    
    /s/ James F. Lairdand Secretary
    
    James F. Laird
  25